Netflix shares tank after big miss on subscriber growth

Over the previous eight quarters, the company has on average topped its total net subscriber addition guidance by about 1 million, with three-quarters of that coming from worldwide markets, according to Wedbush Securities analyst Michael Pachter.

Almost $23 billion was wiped off the value of Netflix last night after it missed subscriber growth and revenue forecasts for the second quarter.

In a letter to shareholders, Netflix blamed the shortfall to faulty internal projections of its subscriber growth, explaining that such guidance is often volatile.

Netflix reported Q2 revenue of $3.91 billion, up 40% year over year, and earnings per share of 85 cents (versus 15 cents in the year-ago quarter).

Netflix's explosive growth may be starting to plateau.

Wall Street analysts expected 1.23 million net adds in the USA and 5.11 million overseas for the period (slightly higher that Netflix's prior guidance).

Netflix Inc. stunned Wall Street by attracting fewer subscribers than expected last quarter, renewing concerns that the video-streaming service has become an investment bubble.

Revenue for the quarter came in at $3.91 billion, lower than the $3.94 billion analyst estimate. Sixteen analysts surveyed by Zacks expected $3.94 billion. As of June 30, Netflix had 130 million subscribers, including 57.4 million in the U.S.

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Looking ahead to the next quarter, Netflix is already anticipating additional challenges to subscriber growth.

"We had a strong but not stellar Q2 (second quarter)", Netflix said in a letter to shareholders.

In the quarterly results, CEO Reed Hastings said the company knows it will face even tougher competition moving forward, with rivals such as Disney, Fox, Comcast and other players moving into their streaming turf.

The company garnered 112 Emmy Awards nominations last week, more than any other television network.

Netflix said Monday that it expects more competition, but dismissed any potential negative impact on its business.

AT&T has just bought Time Warner 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.

"Our strategy is to simply keep improving", Netflix said.

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