Netflix’s share price slumps 14 per cent after reporting a disappointing second quarter

Wall Street darling Netflix’s share price plummeted by 14 per cent in after-hours trading, thanks to a set of lacklustre results for its second quarter.

The site added 5.2m subscribers globally in the three months to June, about a million fewer than it had forecasted.

Netflix said in a letter to shareholders that it had overestimated the rate of new shows being added to the platform over the quarter, but remained confident that this would not affect its long-term growth.

Though analysts said the news wasn’t surprising given hot competition in the sector from rivals like Amazon and Hulu, most put the disappointing results down to it being off-season for its most popular shows, such as the Crown, and the prevalence of live TV events like the World Cup.

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"This latest quarter underlines my belief that Netflix needs subscribers and it needs them fast. It is still growing, but not quickly enough in light of its growing costs," said tech analyst Paolo Pescatore.

"Typically, this is always a challenging quarter due to seasonality. This might have a further negative impact on its third quarter results."

Total revenue for the period was $3.91bn (£2.9bn), at a yearly growth of 40.3 per cent. Analysts had expected revenue of $3.94bn.

Prior to markets closing, Netflix’s stock had doubled year-to-date, and was the second best performing member of the S&P 500.

Principal analyst for Emarketer Paul Verna suggested that things might be more positive for the streaming site stateside, thanks to shows like Stranger Things, Orange Is The New Black and House of Cards set to release new seasons in the coming months.

Despite the weak quarter, and a lowered outlook for the third quarter, Emarketer expects Netflix to remain the clear leader among video streaming services in the US. Netflix has a strong slate of original content that should keep it in the forefront among streaming services, and it plans to continue outspending the competition to develop TV programming and feature films.

This is critical in an era when people increasingly choose streaming services on the strength of their content.

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