Netflix misses on subscribers, but stock is up
Netflix fell short of its own expectations on Wednesday when it reported in its third quarter earnings that it added 6.8 million new subscribers. That is just a tick under the 7 million that the company was projecting.
Netflix now has 158.3 million subscribers globally. The company’s stock went up as much as 10% in after hours trading.
The service said it expects to add another 7.6 million subscribers in the next quarter.
Profit in the third quarter of 2019 bounced back from $271 million in Q2 to $665 million. It’s also up from $403 million in the third quarter last year. Revenue went up 31% to $5.2 billion.
Netflix’s stock plummeted in July after the company reported a subscriber miss and a net loss of US subscribers in its second quarter. Domestic sign-ups have since rebounded with about 520,000 new subscribers.
All of this, mixed with sluggish international growth have spooked investors sending Netflix shares down roughly 25% in the past three months.
Wednesday’s earnings was pivotal for investors who were wondering if Netflix’s problems are temporary or permanent. It’s also the last earnings report before Apple and Disney each launch their own streaming services to compete with Netflix.
Netflix has been resisting any investor concerns about the competition. In Wednesday’s report, the company said, “Many are focused on the ‘streaming wars,’ but we’ve been competing with streamers (Amazon, YouTube, Hulu) as well as linear TV for over a decade,”
It added that “The upcoming arrival of services like Disney+, Apple TV+, HBO Max, and Peacock is increased competition, but we are all small compared to linear TV.”
Disney+ debuts on November 12. For $6.99 a month, the service comes with a library of popular franchises and content including exclusive films and TV shows based on the company’s most successful brands.
Apple TV+ launches on November 1. The tech giant’s service will have programming from some of Hollywood’s biggest stars including Reese Witherspoon and Jennifer Aniston and a monthly price tag of $4.99 a month or free for a year with the purchase of a new iPhone, iPad, iPod Touch, Mac or Apple TV.
Then in 2020, the streaming market will get even more crowded with the launch of WarnerMedia’s HBO Max and NBCUniversal’s Peacock.
Netflix will be losing some of its most beloved licensed shows to them: “Friends,” will head to HBO Max next year and “The Office” will leave Netflix for Peacock in 2021. HBO Max and Peacock have yet to announce how much their services will cost. (WarnerMedia is also the parent company of CNN.)
And let’s not forget that Netflix is already competing with Amazon Prime Video, the Disney-backed Hulu and CBS All Access, just to name a few.
But Netflix still has plenty working in its favor, including a big head start with more than 150 million subscribers worldwide.
Netflix offers original hit TV shows like “The Crown” and “Stranger Things” and it will be adding “Seinfeld,” one of the most popular sitcoms in TV history, to its lineup in 2021.
Netflix Film also released the “Breaking Bad” sequel “El Camino” last weekend and has films on the docket for the rest of the year that could create some Oscar talk such as Noah Baumbach’s “Marriage Story” and Martin Scorsese’s “The Irishman.”
“While the new competitors have some great titles (especially catalog titles), none have the variety, diversity and quality of new original programming that we are producing around the world,” Netflix said on Wednesday.
