After three consecutive quarters of massive beats, Netflix stock is tumbling, down over 10% in kneejerk reaction to Q2 earnings, which beat on earnings but missed and revenue, saw fewer than expected subscribers added in the quarter, and projected less than expected new subscribed in the coming quarter..
In Q2, NFLX reported EPS of $0.85, beating expectations of $0.79 but missed modestly on the top line, reporting $3.91BN in revenue, below the $3.94BN expected. Far more concerning, however, was the number of subscribers which missed on both domestic and international:
- Q2 total net streaming additions 5.15MM, a drop from last quarter’s 7.41MM, and below the Exp. 6.27 MM
- Q1 domestic net streaming additions 0.67MM; missing badly Wall Street exp. 1.21MM, and the company guidance of 1.20MM
- Q1 international net streaming additions 4.47MM, Wall Street exp. 5.06MM, guidance 5.00MM
Meanwhile, Netflix’ Q3 2018 outlook was also weaker than expected, with the company now expecting Q2 net streaming adds of only 5.00 million (0.65 MM in the US and 4.35 MM internationally), a decline from the current quarter’s disappointing numbers, and far below the 5.93 million sellside estimate.
NFLX also expects $3.988 billion in Q3 revenue, generating EPS of only 65 cents, the worst quarter in years.
Adding insult to injury, the company returned to its massive cash burning ways, reporting that in Q2 2018 it burned a whopping $559 billion, the highest number in the past year.
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