Netflix missed its own forecast for subscribers for the second quarter in a row, adding to fears about the future of the streaming video giant.
The California-based company added 6.8m subscribers in the three months ending in September, below its guidance for 7m. However Netflix shares rallied more than 9 per cent in after-hours trade on Wednesday despite the weaker-than-forecast results, indicating that investors had been concerned about a bigger miss.
Pressure was on after Netflix badly missed its own guidance for subscribers in the previous quarter. The misfire has depressed the stock more than 20 per cent over the past three months.
In the US, its largest market, Netflix added 520,000 subscribers, below its forecast for 800,000. This was a recovery from last quarter, when the company lost US subscribers for the first time since 2011.
Outside the US, where Netflix is betting on future growth, results were brighter: the company reported 6.3m new subscribers, above analyst forecasts for 6.05m.
This was the last quarter before Netflix faces an influx of competition in the market it pioneered, beginning with Apple and Disney in November. Netflix on Wednesday said it now expects to add fewer subscribers this year than last year, citing factors including “new forthcoming competition”.
Netflix guidance for the third quarter had been ambitious as the period included the return of Stranger Things, one of its marquee original TV shows, which was thought to boost sign-ups.
Netflix has continued to pump billions of dollars into its shows and films. Analysts expect the company to invest $15bn in content this year. It has justified the splurge with fast subscriber growth, helping its stock soar in recent years.
However sentiment has soured after the big stumble in the second quarter. Netflix shares peaked at $385 a share in May but have since dropped to $287 a share. For the year, the stock has gained 7 per cent, compared to a 19 per cent rise for the S&P 500 index.