Netflix fell 11% after Q3 revenue guidance of $9.73 billion missed the $9.83 billion consensus, offsetting a Q2 beat on earnings and subscriber additions.
Netflix shares fell 11% in Thursday trading after the company's Q3 revenue guidance came in below analyst expectations, overshadowing a Q2 earnings beat.
The streaming giant reported Q2 earnings per share of $4.88, topping the $4.74 consensus compiled by Bloomberg. Revenue for the quarter reached $9.56 billion, slightly ahead of the $9.53 billion estimate. Global paid net additions hit 8.05 million, above the 4.87 million analysts had forecast.
The forward look was the problem. Netflix guided Q3 revenue to $9.73 billion, below the $9.83 billion consensus. The company cited seasonal patterns and the timing of content releases. The ad-supported tier now accounts for 45% of new sign-ups in markets where it is available, up from 40% last quarter, the company said.
Management also announced it will stop reporting subscriber numbers starting next year, shifting focus to revenue and profit metrics. The change drew criticism from some analysts who said it reduces transparency on the ad-tier growth trajectory.
Netflix's Alpha Score sits at 50 out of 100, a Mixed rating from AlphaScala's proprietary model. The stock now trades at roughly 28 times forward earnings, near the low end of its five-year range.
For more on the broader market reaction, see market analysis.
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