Netflix shares are down 14 per cent after the streaming service added fewer new subscribers than it had forecast.
During the second quarter Netflix added 5.2 million new subscribers instead of the 6.2 million it had predicted. The company now has 130 million subscribers worldwide.
For the quarter ended June 30, total revenue rose 40.2 per cent to $3.91 billion and earnings per share came in at 85 cents.
The share price drop wiped almost $25 billion in value from the company’s market capitalisation.
“We had a strong but not stellar Q2,” the company said in a letter to shareholders.
Netflix said it had “over forecast” global subscriber growth for the period, but noted it had under forecast subscriber growth during the previous four quarters.
“The quarterly guidance we provide is our actual internal forecast at the time we report and we strive for accuracy, meaning in some quarters we will be high and other quarters low relative to our guidance,” the company said.
Looking to the current quarter and Netflix expects to add another 5 million global subscribers.
Last week Netflix picked up 112 Emmy nominations, breaking HBO’s 17-year run as the most nominated network. However the streaming service noted the likes HBO and Disney represent new competition as they ramp up their online entertainment services. Netflix is also facing competition from within the tech sector as Amazon and Apple invest in content as part of larger ecosystem subscriptions.
“We believe that consumer appetite for great content is broad and that there is room for multiple parties to have attractive offerings. We anticipate more competition from the combined AT&T/Warner Media, from the combined Fox/Disney or Fox/Comcast as well as from international players like Germany’s ProSieben and Salto in France. Our strategy is to simply keep improving, as we’ve been doing every year in the past,” the company said in its letter to shareholders.