Netflix earnings: Was the streaming giant’s second-quarter miss really just a blip?
Netflix Inc. will get the chance next week to prove its disappointing second-quarter results were just a one-off rather than a recurring problem. All eyes will once again be on subscriber growth as investors decide whether the streaming giant’s miss last quarter was really just a blip—or an indication of a more prolonged slowdown.
Netflix (Nasdaq: NFLX) announces third-quarter earnings results after next Tuesday’s closing bell. For the second quarter, the company reported 5.15 million new subscribers, down from 7.41 million the previous quarter and well below the 6.2 million guidance the company gave in April.
Investor confidence took a hit, sending Netflix shares—which were at an all-time high of $419 a share in early July— into a nosedive, falling to $316.78 in mid-August. The stock has since partially recovered, and is now sitting at $324 a share.
In the company’s July earnings interview, Netflix’s Chief Executive Reed Hastings didn’t seem worried, chalking the shortfall up to simply “some lumpiness in the business.”
“We’ve seen this movie of Q2 shortfall before, about two years ago in 2016,” Hastings said at the time. In 2016’s second quarter, Netflix fell below subscriber growth expectations, but the company has mostly beat guidance since then.
Netflix’s second-quarter miss and subsequent stock plunge didn’t bug most analysts, who stood firmly by their golden child. Piper Jaffray analysts, led by Michael Olson, wrote in July that “the long-term potential is too great for us to suggest anything other than buying Netflix on today’s weakness.
Analysts are generally optimistic about this third quarter. Evercore ISI analysts, led by Anthony DiClemente, wrote in a note last Thursday that they “expect a return to a more normalized cadence of fulfilling expectations.” DiClemente also raised the company’s price target to $350 from $320, citing SensorTower data that showed international downloads of the Netflix app numbered more than 40 million in the third quarter alone.
More at: marketwatch.com |
