Netflix Disappoints: ETFs In Focus

Netflix (NFLX - Free Report) , the world's largest video streaming company, disappointed investors with its third-quarter results. The company registered its weakest subscriber gains in four years as pandemic restrictions eased, streaming competition increased, and live sports events returned to television. Though Netflix beat revenue estimates, it lagged on earnings.

The dismal result has pushed Netflix shares down as much as 7.4% in after-market hours.

Netflix Q3 Earnings in Detail

The company reported earnings per share of $1.74, falling short of the Zacks Consensus Estimate by 39 cents but improved from the year-ago earnings of $1.47. Revenues climbed 22.7% year over year to $6.44 billion and came in above the Zacks Consensus Estimate of $6.39 billion.

Netflix added just 2.2 million new subscribers globally in the third quarter, down from 6.8 million additions seen in the year-ago quarter and the company’s own conservative guidance of 2.5 million. Netflix now has 195.1 million paid subscribers worldwide, up 23% year over year. This represents the weakest third-quarter gain since 2015, when the company was not operating in most of the world. Subscriber growth has decelerated following a strong surge in sign-ups in the first half of 2020 during the pandemic. The streaming giant has added 25.9 million customers in the first half of the year, marking its strongest start ever.

Movies and documentaries were the bright spot in the quarter. The most popular film was The Old Guard — an action film starring Charlize Theron — which has garnered 78 million subscribers in the first four weeks of release. Romantic comedy The Kissing Booth 2 received strong reception with 66 million members watching in the first 28 days. The action film Project Power was also one of the hit movies with 75 million members in the first four weeks. Original content, including new seasons of The Umbrella Academy and Lucifer, garnered 43 million and 38 million households, respectively, to watch these titles in the first 28 days.

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