The stock of Netflix (NFLX) is down 7% after the streaming giant issued second quarter earnings and forward guidance that disappointed Wall Street analysts.
Revenue at Netflix during Q2 rose 2.7% to $8.19 billion U.S., which was slightly below analysts’ expectations.
Forward guidance that calls for revenue of $8.52 billion U.S. in the current third quarter was also lower than the $8.67 billion U.S. that had been anticipated.
The company reported earnings per share of $3.29 U.S. for Q2, which beat consensus forecasts for earnings of $2.86 U.S. a share, according to Refinitiv data.
Perhaps most importantly, Netflix added 5.9 million net new subscribers during the second quarter, which trounced the 1.9 million that Wall Street had forecast.
The subscriber additions marked the company’s best second quarter since the depths of the Covid-19 pandemic in 2020.
Netflix had a total of 238.4 million subscribers worldwide as of June 30 this year.
The company said that its strategies of cracking down on password sharing and launching a cheaper $6.99 U.S. per month advertising tier on its streaming platform are proving beneficial.
Netflix said that it added 1.2 million subscribers in the U.S. and Canada during Q2, its largest regional quarterly gain since 2021.
During a conference call with analysts and media, Netflix executives said new sign-ups are exceeding cancellations and that they expect sales growth to accelerate in the months ahead.
The company raised its 2023 forecast for free cash flow to $5 billion U.S. from $3.5 billion U.S. previously.
Netflix executives also said they are seeing a minimal impact, so far, from the current strike by Hollywood writers and actors.
Netflix’s stock has risen 120% over the last 12 months to trade at $477.59 U.S. a share.
