Assured Trading: Stock in Netflix, the world’s biggest video streaming provider, plunged in after-hours trading after it posted worse-than-expected second quarter earnings.
The Los Gatos, California-based company said it added just 1.68 million subscribers in the three months from April to June, considerably fewer than its own predictions for 2.5 million. Worse news came in the form of subscriber cancellations which the company said had risen “slightly and unexpectedly”. Netflix shares slumped by as much as 15% to $85.90 in the after-hours trading session on the news.
The lackluster performance in user growth was attributed to the company’s decision to raise prices for new subscribers and to stagger increases for existing ones. Around 20 million subscribers could pay between $1 and $2 more each month by the end of 2016.
“This shows just how sensitive to price users are,” said Jana Makiguchi, newly-appointed chief economist at Assured Trading. “A dollar a month is hardly a large sum but the US economy simply isn’t doing as well as many think.”
Although Netflix has rolled out to over 180 countries, it is losing money on those operations because, in many parts of the world, users don’t speak enough English to find sufficient value in the programming the company offers. This means that its home market in the US is important because it effectively subsidizes its losses elsewhere in the world.”
Assured Trading reaffirmed its hold rating on the stock content for the time being believing that subscriber growth will rebound as the company adds more local content to its operations in non-English speaking countries.

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