Netflix’s growth is slowing and investors are fleeing

Netflix’s growth is slowing and investors are fleeing

November 16, 2016

Image: Netflix

Netflix is still growing, but not as fast as it once was.

The streaming service added only 1.7 million members in the second quarter of 2016, nearly 1 million fewer than expectations.

During the same period last year, Netflix added 3.3 million members.

“We are growing, but not as fast as we would like or have been,” CEO Reed Hastings wrote in a letter to shareholders Monday. “Disrupting a big market can be bumpy, but the opportunity ahead is as big as ever and we continue to improve every aspect of our business.”

The disappointing growth numbers led to an aggressive stock decline though it’s worth noting that Netflix is no stranger to wild stock swings.

Netflix stock prices fell 16.7 percent in after-hours trading on Monday. The company finished the quarter with $1.8 billion in revenue.

Hastings blamed media coverage in April of Netflix’s plan to raise subscription prices by up to $2 a month as a reason for the disappointing quarter.

The company referred to that plan as “un-grandfathering” members who had cheaper plans to full price.

“We think some members perceived the news as an impending new price increase rather than the completion of two years of grandfathering,” Hastings said to shareholders.

Although Netflix acknowledged that it lost members due to the price hike, it said the increase will still lead to more revenue to drive long-term growth.

Hastings said he did not blame increased competition from streaming services like Amazon Prime and Hulu for the earnings miss.

As for the near term, Netflix is expecting to lose money. The company’s global expansion, launched last January, is expected to result in a $95 million loss in the third quarter as the company invests in new areas. Regulations in China, leading to the closure of Disney’s Alibaba-partnered streaming service, also challenged the Netflix over the past months.

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Read more: http://mashable.com/2016/07/18/netflix-growth-slowing/