Netflix Shares Tumble as Subscriber Additions Underwhelm
The company added 533,000 users of its domestic streaming service during the first quarter, but analysts had forecast 800,000.
Netflix on Tuesday reported second-quarter revenue numbers that matched expectations but it was light on subscriber additions and the stock was tumbling in after-hours trading.
Revenue climbed 13 percent to $889 million and earnings were $6.2 million, reversing a loss of $4.6 million a year ago. On a per-share basis, earnings came in at 11 cents while analysts were looking for only about a nickel, which was above Netflix's own guidance of just 2 cents.
Still, the company added only 533,000 domestic streaming subscribers while Wall Street was figuring on about 800,000. It ended the first quarter with 22.7 million domestic subscribers and about 3 million international users.
Netflix said it lost about 850,000 DVD subscribers, finishing the quarter with 9.15 million. Combined streaming and DVD subscribers rose to 25.23 million, up from 23.3 million in the same quarter a year ago.
Shares of Netflix, which were up fractionally to $80.39 during the regular session, were falling as much as 14 percent during the after-hours session.
In a letter to shareholders, CEO Reed Hastings held out hope that Netflix will someday do a deal with Time Warner's HBO, even though HBO continuously expresses the opinion that it considers Netflix a competitor and therefore will not license its TV shows to it for streaming.
"While we compete for content and viewing time with HBO, it is also possible we will find opportunities to work togeter -- just as we do with other networks," Hastings wrote.
Hastings also gave credit to Netflix for drumming up larger audiences for certain TV shows.
"Last quarter, the audience for season five of Mad Men swelled subsequent to prior seasons becoming available on Netflix," he wrote. "Last week, the fifth season of Breaking Bad debuted to record numbers, up 14 percent from last year's premiere, no doubt buttressed by new viewers who were introduced to the series on Netflix."
He also said Sons of Anarchy on FX and The Walking Dead on AMC have seen season-over-season viewership growth due to their prior seasons being available for streaming on Netflix.