Netflix shares nosedive


The video-streaming service saw shares drop by 15 percent, after adding one million less users than predicted.

Last quarter, Neflix shares plunged as much as 15 percent, after the video-streaming service added 5.2 million users in the period – roughly one million less than it had predicted – fuelling concerns that it was an investment bubble. Despite the new subscriber glut, Netflix reported that revenue grew to $3.9 billion from $2.8 billion, while profit increased to $384 million (85 cents a share) from $66 million (15 cents a share).

The company’s execs are unconcerned, saying that Netflix’s growth over the past 12 months has still exceeded expectations. In a letter to shareholders they wrote that they’d had “a strong but not stellar quarter, ending with 130 million memberships”.

Indeed, CFO David Wells conceded during the company’s recent earnings webcast that customer additions continue to be up on a year-over-year basis, but that this “wasn’t up as much as we thought it was going to be”, but insisted that Neflix is “still on track for a strong growth year”.

Regardless, investors value the company much higher than other media companies of similar size, particularly because they see good potential for future growth. According to reports, its market valuation this year surpassed that of the Walt Disney Co.

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