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    Home»Sections»Broadcasting and Media»Netflix shares plunge as customer growth stalls

    Netflix shares plunge as customer growth stalls

    Broadcasting and Media By Agency Staff17 July 2019
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    Netflix tumbled after the streaming giant reported a surprise loss of US customers for the second quarter, renewing concerns about its growth prospects at a time of looming competition.

    The world’s largest paid online TV network said on Wednesday that it lost 130 000 customers in the US, the result of higher prices and a weak slate. It signed up 2.7 million subscribers globally in the period, also missing projections. The company forecasts seven million new sign-ups this quarter, as several top shows, such as Stranger Things and Orange Is the New Black, return to the service.

    The shortfall will renew investor concern about the company’s heavy programme spending and low profitability. The loss of customers in the US was the first in years, and suggests Netflix may be running into price resistance or the limits of the addressable domestic market. It has forecast it can reach as much as 90 million customers in the US, compared to 60.1 million currently.

    The company signed up 2.8 million new international customers during the quarter, missing its own forecast of 4.7 million

    Analysts expect the company to have a blockbuster second half of 2019 because of a heavy release schedule. But competition is coming. Walt Disney and Apple plan to introduce streaming services this year, while offerings from Comcast and AT&T arrive in 2020. Netflix has said these rivals won’t eat into its customer base, but competitors plan to take back rights to some of the service’s most popular programmes.

    International results flagged, too. The company signed up 2.8 million new international customers during the quarter, missing its own forecast of 4.7 million. It expects to tack on another 6.2 million in the current third quarter, along with a more modest 800 000 in the US.

    Earnings for the second quarter fell to $0.60/share, but beat analysts’ estimates of $0.56. Sales grew 26% to US$4.92-billion, compared to projections of $4.93-billion.

    The shares fell as much as 12% to $318.31 in after-hours trading. The stock was up 35% for the year at the close of regular trading, nearly double the gain of the S&P 500.  — Reported by Lucas Shaw, (c) 2019 Bloomberg LP

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