Why Netflix Added 9.6 Million Paid Subscribers but Didn’t Impress



Netflix has added 18.4 million paid subscribers in the last two quarters

If Netflix’s (NFLX) subscriber count beats Wall Street analysts’ estimates, its stock usually climbs, as this metric is currently the most closely watched by investors ahead of earnings growth. Subscriber growth is a gauge for future growth.

Netflix added an impressive 9.6 million paid subscribers globally during the first quarter of 2019, trumping analysts’ consensus estimate of 8.9 million new paid subscribers. The company now has a commendable 148.8 million subscribers across the world.

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Netflix stock fell on dull second-quarter forecast

However, despite its blockbuster subscriber growth, Netflix stock fell over 3% in after-hours trading on April 16. The company expects to add only 5 million subscribers in the second quarter, which has stolen the thunder from its first-quarter subscriber growth.

Netflix’s relatively tepid second-quarter subscriber growth forecast could be the result of higher subscription fees not only in the United States, where subscriber growth is quickly slowing, but also in other markets such as Brazil and certain European regions.

Despite this underwhelming forecast, the company expects its revenue growth to accelerate in the second quarter due to higher subscription fees in these markets.

Since the fourth quarter of 2018, Netflix has been reporting its subscriber numbers slightly differently depending on whether subscribers are paying or are using a free trial. The company is splitting these subscription numbers to better manage market expectations. One factor behind the company’s miss in the second quarter of 2018 was its lower free trial subscriber count, which painted an inaccurate picture.


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