Netflix drops after-hours as subscribers turn off following recent price rises
Netflix Inc (NASDAQ:NFLX) smashed expectations with its first-quarter results, but shares in the US TV streaming giant fell overnight as it warned subscriber growth will slow over the next few months.
The company, which is behind popular shows such as Stranger Things and the Crown, added a net 9.6mln customers in the opening three months of 2019, better than the 8.9mln analysts had predicted.
READ: Netflix adds 8.8mln subscribers in final quarter
That helped to push revenues 22% higher to US$4.52bn, slightly ahead of Wall Street’s estimate of US$4.50bn.
The big beat came at the bottom line though, with Netflix delivering earnings per share of US$0.76; better than the US$0.64 per share it posted in the first quarter of 2018, but well ahead of consensus of US$0.57.
Despite the beats across the board, the stock fell as much as 5% in after-hours trading in New York. It has since recovered some of those losses though, and is currently down 1% to US$355.90, valuing it as just shy of US$157bn.
Weak subscriber growth guidance
The sell-off was sparked by a warning that recent price rises have seen more customers in the US and Canada cancel their subscriptions, although they believe this is a short-term issue.
Netflix expects to add a net 5.0mln subscribers in the second quarter – almost 9% fewer than it added this time last year. Only 300,000 new US customers are forecast to sign up.
The weak forecast comes at a time when competition in the streaming space is intensifying. Disney and Apple are both set to launch their own services shortly, while Amazon.com Inc (NASDAQ:AMZN) is already well-entrenched in the sector.
Netflix is spending heavily to stay at the top of the game, so much so that it now expects cash burn to hit US$3.5bn in 2019 – some £500mln more than it had originally forecast. Management is sticking to its guns that 2019 will be the peak cash burn year.
A couple of reasons to be cautious
Markets.com analyst Neil Wilson said there were two main reasons to be cautious.
“[Firstly,] price hikes are be rolling out across a number of key geographies and this gives management enough reason to be conservative about net new subscriber adds.
“Meanwhile, we should also look at an increasingly competitive space with Disney and Apple recently announcing their own streaming platforms. Further, we should anticipate certain plateaus in the growth cycle.”
Story by ProactiveInvestors
Source: https://www.proactiveinvestors.com/companies/news/218764/netflix-drops-after-hours-as-subscribers-turn-off-following-recent-price-rises-218764.html
Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.
"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.
Please Help Support BeforeitsNews by trying our Natural Health Products below!
Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST
Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!
HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.
Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.
MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser! Cleans out toxic buildup with oxygen!
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover - Reduces Smart Meter radiation by 96%! (See Video).