Netflix Buffering

Netflix is a stock that 95 Vestact clients own in new York. On Wednesday after-market, Netflix released second-quarter numbers saying that overall subscriber numbers came in well below what the company projected and that for the first time in eight years, US subscriber numbers dropped. Not good! The last time subscriber numbers dropped in the US, the company was splitting into DVD mail-order system and a streaming platform!

Paid subscribers were only up 2.7 million, of which 2.83 million came from outside the US, meaning that there was a drop of 130 000 subscribers in the US; Netflix's guidance three months ago was for an addition of 5 million. A Yogi Berra quote comes to mind, "It's tough to make predictions, especially about the future." By the end of June, Netflix had a total of 151.6 million paid subscribers in total.



CEO Reed Hastings said that the reason for the wide miss was because the company introduced higher pricing plans in January, and the lack of high-profile original content launches in the quarter. So it seems that a Netflix subscription may be elastic above some threshold after all?

"Our missed forecast was across all regions, but slightly more so in regions with price increases. We don't believe competition was a factor since there wasn't a material change in the competitive landscape during Q2, and competitive intensity and our penetration is varied across regions." said Hastings.

Netflix is a business in transition. It is about to lose content like Friends and The Office, and face new competition from Disney and HBO. It is fighting back with new launches that will perk up subscriber numbers in the third-quarter (underway now). The third season of Stranger Things has launched already. The 7th and final season of Orange Is The New Black is on its way. There is more: Money Heist, The Crown, Ozark, Comedians In Cars Getting Coffee, as well as comedy specials from Aziz Ansari, Katherine Ryan, Whitney Cummings etc.

Accordingly, Netflix management expects third-quarter subscriber adds of 7 million, of which 6.2 million will be outside of the US. They are sticking to their original subscriber guidance for 2019. Netflix remains at the top of the streaming food chain. It's competitors are still fiddling with their apps and interfaces and looking at the map of the world in their headquarters! Netflix is there already and are not afraid to go into territories where competition hasn't even considered.

Netflix stock plummeted yesterday, down 10.3% to close at $325 per share. Not a bad time for brave investors to buy a few?