Netflix reports weaker-than-expected new subscriptions in the second quarter

Netflix plans to spend $8 billion on content next year the company has said. Disney spent $13.5 billion on content in fiscal 2017 about half of it on sports programming

The numbers released Monday mark a rare letdown for a company that has enthralled investors with its ability to consistently top expectations.

Shares of Netflix closed Monday at $400.48, with a consensus analyst price target of $382.60 and a 52-week range of $160.02 to $423.21. Stocks opened at $346.95 apiece on Tuesday morning, but by midday they had rebounded back up to around $380.

Netflix said in a letter to shareholders that it had overestimated the rate of new shows being added to the platform over the quarter, but remained confident that this would not affect its long-term growth. According to Netflix they added 670,000 new subscribers in the United States but miss the expected 1.2 million subscribers. Netflix reported 5.2 million new subscribers - which was well short of its projected 6.2 million new customers.

USA net adds of 0.7m (vs. guidance of 1.2m) were down vs. last year's Q2-record 1.1m, but consistent with previous Q2 performance (0.5m in Q2'12, 0.6m in Q2'13, 0.6m in Q2'14, 0.9m in Q2'15, and 0.2m in Q2'16).

Ranganathan said Netflix pinned the shortfall on overaggressive earnings estimates in a "seasonally weaker [second quarter], partly aggravated by audience distraction from the World Cup".

The streaming video pioneer added 5.2 million customers from April through June, 1 million fewer than forecasts from Thomson Reuters I/B/E/S, as it added new programming including "Lost in Space" and new episodes of Marvel's "Jessica Jones" and "13 Reasons Why". Internationally, the firm added 4.47 million memberships. Analysts had expected revenue of $3.94 billion.

"[Netflix's] ultimate opportunity remains unquestionably large", Wlodarczak said, "although moderately smaller than previously modelled".

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They're also anxious about the amount of cash Netflix might spend this year - up to $4 billion by J.P. Morgan estimates - and the pace of subscriber growth.

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

Second-quarter revenue was $3.91 billion, lower than the $3.94 billion Street estimate.

Netflix's stock fell almost 14% after its earnings report.

Netflix cited an array of competitors, starting with YouTube. Disney is selling an internet version of its sports network ESPN and plans to introduce a general entertainment video service next year.

In the letter to shareholders, Netflix said it expected more competition from global players including ProSiebenSat 1 Media in Germany and on-demand service Salto in France. "Our strategy is to simply keep improving, as we've been doing every year in the past".

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