Netflix plunges as subscriber growth disappoints in Q2

Netflix shares took a hit after disappointing growth figures for the second quarter

Research from CBH Insights cited by CNBC suggests that Netflix subscribers watch an average of 10 hours per week, compared to just five hours on Amazon and Hulu, whereas the National Bureau of Labor Statistics says traditional TV viewers watch almost 20 hours per week. "As we head into the rest of 2018, we believe Netflix has a number of growth levers which should fuel the company's next phase of strategic penetration among both USA and especially worldwide consumers despite some softness seen in 2Q", he wrote. That's the area where Netflix is trying to grow the most - of the 5.2 million subscribers it added last quarter, about 4.5 million were overseas.

Analysts had expected 79 cents on revenue of $3.94 billion.

With all this, the stock is tanking.

Netflix expects third quarter revenue to be $3.99 billion United States and new subscription adds of five million, compared with 5.3 million in the same quarter a year ago.

Netflix reported lower than expected subscriber growth for the first time in five quarters.

J.P. Morgan reiterated an Overweight rating, while increasing its price target to $415 per share from $385, saying it does not believe the latest subscriber numbers "reflect a fundamental change in the Netflix story".

Foxtel executives are this morning witnessing light at the end of a tunnel with news that consumer engagement with arch rival Netflix is slowing. The stock is up almost 150% over the past year.

Although Netflix fell short with subscribers, its shows remain critical hits.

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"Investors are devastated by Netflix's Q2 projection that went down in dramatic flames".

Investors value Netflix at a far higher level than other media companies of similar size because of that potential for future growth.

Total streaming revenue for Q2 18 is US$3,814 million, up from US$2,671 million during the same period previous year. Analysts had expected revenue of $3.94 billion.

"We had a strong but not stellar quarter", the company wrote in a letter to shareholders.

Netflix has been paying up big time for its content. Netflix said Monday that it expects content expenses to hit $8 billion this year. The company also said "HBO and Disney are evolving to focus on internet entertainment services", while Amazon and Apple are investing in content as part of larger "ecosystem subscriptions".

Netflix cited an array of competitors, starting with YouTube.

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

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