The company also missed its targets for worldwide growth, while financial guidance for the second quarter fell short of analyst expectations.
"These are still millions of new subscribers, even if they didn't meet the expectations that might have been set by the last two quarters, which were extraordinarily high", he said. Netflix, Inc. reports earnings Monday, July 16, 2018. Stocks opened at $346.95 apiece on Tuesday morning, but by midday they had rebounded back up to around $380.
In their letter, Netflix officials acknowledged that the company's subscriber growth was lower than anticipated but didn't off much of an explanation of how it came up short. CNBC explains that "domestic additions were only a little more than half of its projections, while it just added 4.5 million subscribers internationally". This Q2, we over-forecasted global net additions which amounted to 5.2m vs. a forecast of 6.2m and flat compared to Q2 a year ago, as acquisition growth was slightly lower than we projected.
Despite this, Netflix added 5.1 million households over the three-month period - giving it 130 million subscribers overall with 57.4 million in the U.S. and nine million in the UK.
It signed up 4.47 million subscribers internationally, while analysts were expecting 4.97 million.
"After four consecutive quarters of beating its own guidance, and analysts' expectations on key metrics such as revenues, profits, and subscriber gains, Netflix disappointed with a weak Q2", said eMarketer principal analyst Paul Verna.
"[Netflix's] ultimate opportunity remains unquestionably large", Wlodarczak said, "although moderately smaller than previously modelled".
Almost $23 billion was wiped off the value of Netflix last night after it missed subscriber growth and revenue forecasts for the second quarter.
It marked the first time in a more than a year that Netflix had not exceeded its subscriber growth projections.
The company added 670,000 subscribers in the United States and 4.5 million internationally in its second quarter. The company reported earnings of $384 million, or 85 cents a share, up from $66 million, or 15 cents, a year earlier. Total revenue rose 40.2 percent to $3.91 billion.
Netflix said Monday that it expects more competition, but dismissed any potential negative impact on its business. "Our strategy is to simply keep improving, as we've been doing every year in the past".