Netflix shares dive after disappointing quarterly results

Netflix shares dive after disappointing quarterly results

Netflix has always been a volatile stock before the earnings report, its share price had doubled in value since the beginning of 2018.

While Wall Street remains overwhelmingly positive on Netflix and its role in video streaming globally, the numbers did raise question marks over future growth.

On top of growth, the company has begun to focus on its profitability.

Netflix stock is now in a free fall in after-hours trading. The shares had more than doubled before the sell-off.

That has driven a doubling of its share price in the previous year, raising its value to within sight of $200 billion as of Monday's close.

Before the earnings report, Netflix shares had gained 109 percent, making it the second-strongest performer on the S&P 500 index.

The company's total monthly customers reached 130 million worldwide, 1 million fewer than forecasts from Thomson Reuters, as it added new programming including "Lost in Space" and new episodes of Marvel's "Jessica Jones" and "13 Reasons Why".

There seems to be a number of things at play, most of which could have negative impacts on the progress of Netflix.

It was estimated by eMarketer that Netflix would have 147.5 million individual users this year, an increase of 11% over 2017 and that it would capture almost 74% of US OTT video users.

Netflix shares plunge in after-hours trade after forecast miss

"This latest quarter underlines my belief that Netflix needs subscribers and it needs them fast".

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.

Earnings per share: 85 cents. Total revenue rose 40.2 percent to $3.91 billion.

It is a crucial measurement for investors as subscriptions are key to funding the company's investment in its own TV shows and movies, which is expected to hit $8bn (£6bn) this year alone.

The company says it expects its operating margin to improve to between 10 or 11 per cent this year.

But it also faces growing competition.

AT&T just bought Time Warner for $81 billion in a deal that includes HBO - a pay TV and video streaming service that AT&T plans to expand in an attempt to lure more viewers away from Netflix.

Disney, which is seeking to purchase 21st Century Fox's entertainment assets in the U.S., is planning to launch its own streaming service.

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