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  1. Netflix, world’s largest paid online TV and one of Wall Street’s hottest stocks, plunges; here’s the reason

Netflix, world’s largest paid online TV and one of Wall Street’s hottest stocks, plunges; here’s the reason

Netflix Inc. plummeted in late trading after posting disappointing subscriber growth in the latest quarter, threatening the run of one of Wall Street’s hottest stocks.

By: | Published: July 17, 2018 1:42 PM
An USB key with the logo of Netflix, the American provider of on-demand Internet streaming media. (Reuters File Photo)

Netflix Inc. plummeted in late trading after posting disappointing subscriber growth in the latest quarter, threatening the run of one of Wall Street’s hottest stocks. Netflix added 5.2 million users in the second quarter, about a million fewer than the company predicted. Its outlook for the current quarter also reflected a deceleration: The world’s largest paid online TV network expects to add 5 million customers, a slower pace than a year earlier.

The stock fell as much as 13 percent to $347 in extended trading. It had more than doubled this year through Monday’s close.

Investors and analysts now have the job of weighing whether the slowdown is a blip or a longer-term problem. Netflix’s stock has surged to record highs in recent months because investors believe the company will add tens of millions of customers around the world for years to come.

One reason for the shortfall may have been a lack of content. Netflix released a thin slate of shows in the quarter, relative to its typical output. It didn’t add new seasons of its biggest hits, such as “Stranger Things,” nor did a new show become a phenomenon. Ever since Netflix released “House of Cards,” the company has credited new seasons of original series with luring new customers.

World Cup Woes?

Potential new customers may have also been distracted by the World Cup, a quadrennial soccer tournament that is among the most-watched TV events in the world. Netflix, based in Los Gatos, California, didn’t specify why it fell short last quarter, beyond citing the difficulty of forecasting growth in 190 countries around the world.

Investors value Netflix at a far higher level than other media companies of similar size because of that potential for future growth. It’s worth more than Walt Disney Co., for instance, despite reporting less than a quarter of the revenue.

Netfllix did release a new season of the Marvel series “Luke Cage,” as well as a breakout standup comedy special in Hannah Gadsby’s “Nanette.”

Once primarily a service for English speakers, Netflix has ramped up its investment in shows filmed in other languages. The company debuted its first Danish and first Indian dramas in the quarter, and it plans to release a new foreign language program at least once a week next year.

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