Why Netflix Is Getting Crushed in Q2

By Chris Lange Updated Jan 11, 8:56PM EST · Published Jul 16, 4:27PM EDT

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Why Netflix Is Getting Crushed in Q2 — © Wikimedia Commons

Netflix Inc. (NASDAQ: NFLX) reported second-quarter financial results after markets closed Monday. The company said that it had $0.85 in earnings per share (EPS) on $3.91 billion in revenue, compared with consensus estimates from Thomson Reuters that called for $0.79 in EPS on $3.94 billion in revenue. The same period of last year had $0.15 in EPS on $2.79 billion in revenue.

During the second quarter, global net adds totaled 5.15 million. In the United States, Netflix added 0.67 million memberships. Internationally, the firm added 4.47 million memberships.

Note that Netflix now has a total of 130.14 million total memberships worldwide.

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Looking ahead to the third quarter, the company is calling for $0.68 in EPS on $3.99 billion in revenue. At the same time, the company is expecting to see net adds of 5.0 million. There are consensus estimates calling for $0.73 in EPS on $4.13 billion in revenue.

In the report the company detailed:

US 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). Through the first six months of the year, our US net adds are slightly ahead of last year.

Internationally, 4.5m net additions grew 8% year over year on broad market growth. Currency had a +$65 million impact on international revenue year over year (+13% international ASP growth on a FX neutral basis), but this positive impact was smaller than we had forecast 90 days ago as the US dollar strengthened meaningfully against many currencies since our Q1’18 earnings report in April. As a reminder, we do not hedge our revenue with derivatives.

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. Following the announcement, the stock was down about 14% at $346.00 in Monday’s after-hours session.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.