Netflix Shares Drop On Earnings Miss

By Staff of Admiral Markets

Access To Financial Markets Made Easy • Oct 21, 2020 at 4:00 AM EDT

Shares in Netflix were immediately down 6% in after-hours trading after the online streaming giant missed earnings estimates, as well as its own guidance for new subscriptions.

Shares in Netflix (NFLX) were immediately down 6% in after-hours trading after the online streaming giant missed earnings estimates, as well as its own guidance for new subscriptions:

Third-quarter revenue came in at $6.44 billion against an expected $6.38 billion
Earnings per share (EPS) came in at just $1.74 per share against an expected $2.13 per share

Netflix shares drop on earnings miss

For online tech companies, one of the most important metrics is new subscriber growth. The company reported a slowing subscriber growth rate with 2.2 million paid subscribers last quarter against its own projected 2.5 million new subscriber goal. However, the company did report an increase of 10.1 million subscribers in the second quarter and 15.8 million new subscribers in the first quarter due to the coronavirus pandemic and lockdowns around the world.

For the fourth quarter, Netflix is forecasting revenue of $6.57 billion on earnings of $1.35 per share with 6 million net paid subscribers. If the company does reach its own fourth-quarter guidance that means it will have added 34 million net subscribers in 2020, surpassing its previous annual high of 28.6 million in 2018.

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