Netflix Stock Plummets as Forecast for Subscribers Misses

Netflix the U.S. based video streaming service has forecasted growth for its U.S. as well as international subscriptions at a slower pace than was expected on Wall Street for the current quarter. That sent shares plummeting by 8% during Monday after hours trading.

The video streaming service said it was expecting to add over 500,000 customers across the U.S. during the second quarter, which ends during June. In comparison to the 586,000, that Wall Street had targeted.

The forecast included a slight impact from the start of an increase in monthly subscription costs for its TV and movies service, said the company.

The service which is known for the original programs it has including House of Cards and Orange is the New Black, announced it was expecting to add over 2 million monthly subscribers outside the U.S., while analysts were expecting 3.5 million

It reported results as well for the first quarter where its subscriptions were ahead of its target.

Netflix is often prone to having large price swings in stock as investors bet on success of its mission to redefine viewing of television across the globe.

The long term company results depend upon the most on how quickly and profitably it can expand. Netflix has already launched in close to every country, at a very high cost, and is now facing the task of adapting its service to the many different markets as well as cultures as its competitors start rushing in.

Netflix in January went live in over 130 countries, which was an unprecedented global push driven by Reed Hastings the CEO to counter the slowing growth within the U.S.

Initial sign-ups have been limited in certain countries due to the service at this period offers just English language content as well as not accepting all local options for payment, said Hastings yesterday.

Netflix has yet to make its debut in China, where the company has been exploring its entry for quite some time. On Monday, it announced it was holding continuing discussions and the decision taken for the Chinese market would only have a slightly modest financial effect in the short term.

 

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