Netflix shares fall despite bumper earnings: Streaming giant warns fewer new subscribers will sign up in the coming months
Streaming giant Netflix posted a bumper set of figures last night – but warned fewer new subscribers will sign up in the coming months.
The US tech giant, which is behind shows such as The Crown said it added 1.74m paid subscribers in its home market and 7.86m worldwide – outstripping both its own and Wall Street’s estimates.
Netflix also outperformed in the amount of revenue it made in the first quarter – with turnover of £3.5billion, up 22 per cent, beating forecasts of £3.4billion. Its earnings rose 19 per cent to £264million – also surpassing estimates.
Netflix’s The Crown will soon star Olivia Colman, pictured. The US tech giant, said it added 1.74m paid subscribers in its home market and 7.86m worldwide
More than 25m households that have Netflix accounts have already watched David Attenborough show Our Planet, its most ambitious documentary project ever, and a documentary about the shambolic Fyre festival has been watched by 20m.
But shares fell 5 per cent in after-hours trading after it said it will add fewer subscribers in the second quarter.
Netflix said it expects another 5m people worldwide to sign up to its film and TV streaming service in the second quarter, compared with 5.45m it added in the same period of last year.
The cooler outlook comes as the company faces increasing pressure from rival streaming services that are being launched by Disney and Apple.
Disney last week launched its Disney Plus service in the US, which offers a range of Disney, Pixar and Star Wars films for $6.99 a month – much less than the $13 that Netflix charges Americans for its standard package.
But Netflix shrugged off the competition, saying it still expects another year of record annual subscriber growth and is looking forward to ‘a strong slate of global content in the second half of the year’.
This includes new series of hit shows Stranger Things and Orange is the New Black, and new Martin Scorsese film The Irishman.
Before the results were released, Deutsche Bank raised its rating on Netflix shares from ‘Hold’ to ‘Buy’.
Analyst Bryan Kraft said Netflix is becoming ‘a cultural necessity for people around the world’.
He added that Netflix is increasingly a ‘magnet for talent’ and that there are ‘no other competing platforms that approach Netflix’s reach’.
Netflix was founded in 1997 by entrepreneurs Reed Hastings and Marc Randolph in California.
It was originally a postal DVD rental service but in 2007 it started offering customers the choice to stream films and TV shows online.
The company gained critical acclaim when it launched its first self-made TV show, House of Cards, in 2013, and now ploughs billions into making original content.