Netflix stopped issuing forward-looking guidance on subscriber growth last year. But the streaming giant just may have been guilty of mismanaging investor expectations for Q2 member adds, which ended up coming in at an impressive 5.89 million.
The subscriber performance was Netflix’s best in six quarters, but it was not impressive enough for investors.
Netflix shares have dropped more than 9% on the Nasdaq at the moment this sentence was typed, with JP Morgan equity analyst Doug Anmuth issuing a note suggesting that the streaming company's new account-sharing crackdown isn't generating as much membership growth as it should.
Anmuth, who maintained a “buy” rating for Netflix, did suggest that the new stricter policies should deliver subscriber expansion down the road, however.
Searching the flora and fauna of equity analyst Netflix notes Thursday morning, we couldn't find any significant ding or downgrade that would justify a 9%-plus stock price depreciation.
Notably, net income, at $1.488 billion for Q2, missed Netflix's own guidance of $1.6 billion. Meanwhile, revenue of $8.187 billion nearly reached guidance of $8.2 billion but missed analyst consensus expectations of $8.3 billion
UBS analyst John Hodulik noted a 1% decline in average revenue per customer on a foreign-exchange neutral basis.
The devil might be in the details, or lack thereof.
Wrote MoffettNathanson principal analyst Michael Nathanson: “Without company disclosure around the number of ‘Extra Members’ being added to accounts as part of the password-sharing crackdown, the number of users that crackdown has even targeted so far or any insight into the number of subscribers on the Standard with Ads tier, the drivers underpinning Netflix’s revenue growth are more unclear than ever, giving us less confidence in our ability to accurately model this company.”
