Netflix defended its net loss of subscribers below 1 million in the second quarter. Netflix stock price rose more than 12% on the same day, including after-hours trading, as the net loss of subscribers was only half of Wall Street’s forecast.
According to Bloomberg News on the 19th (local time), Netflix announced that it had a net loss of 970,000 paid subscribers in the second quarter. This is half of Wall Street’s 1.83 million forecast. In addition, Netflix predicted that it will make up for the net loss of subscribers in the first half of the year with a net increase of about 1 million paid subscribers in the next quarter.
Sales of Netflix rose 8.6% year-on-year to $7.97 billion. As for the reason why it fell below Wall Street’s forecast, Netflix said the dollar was strong. As the dollar continued to strengthen, it had some impact on opening consumers’ wallets and hurt them with foreign exchange losses.
Netflix’s stock price plunged more than 35% in a day in April as the number of paid subscribers turned to a net decline for the first time in 11 years in the first quarter of this year. However, analysts say that the net loss in the second quarter was smaller than expected, relieving investors’ concerns in a quarter. The four seasons of the original series “Stranger Things” were found to have driven this performance.
By country, about 1.3 million subscribers left the U.S. and Canada in the second quarter, followed by 770,000 from Europe, the Middle East, and Africa. However, it recorded an increase of 1.1 million subscribers in the Asia-Pacific region. Netflix explained that the policy of lowering subscription fees worked in the Indian market, which has a low market share.
Netflix announced early next year that it will unveil a low-cost plan that is considered a breakthrough that can boost its growth potential. If you subscribe to this, you can expand the size of subscribers because the subscription fee becomes cheaper instead of having to watch advertisements. In addition, investors are paying keen attention to the timing of the implementation of the plan because it will be possible to generate profits in the advertising sector.