Netflix announced on Tuesday (19) that it lost 970,000 subscribers between April and June, avoiding the worst-case scenario projected by the company, but releasing a forecast below Wall Street’s expectations for the current quarter.
The company expects to gain 1 million subscribers in the third quarter, which sent its shares soar in extended trading. The shares, which have fallen 67% this year on concerns about the company’s growth, rose 7% after the release of the balance sheet.
Wall Street analysts, on average, had expected a forecast of 1.84 million new subscribers, according to Refinitiv data.
The company plans to launch an ad-supported subscription plan next year and warned that the appreciation of the dollar is also hitting revenue earned outside the United States.
Netflix had warned in April that it expected to lose 2 million subscribers in the second quarter, shocking investors and creating doubts about its long-term growth prospects.
In a letter to shareholders, the company said it had examined the drop in subscriptions and concluded that the move was attributed to factors such as password sharing, competition and the economic crisis.
Netflix remains the world’s largest video streaming service, with nearly 221 million subscribers.
On Monday (18), the company announced that it will charge users in five Latin American countries —Argentina, Dominican Republic, Honduras, El Salvador and Guatemala — an additional charge for accessing their accounts from more than one household. Sought in Brazil, Netflix only stated that the country “is not included among the countries where the rule [de moradia extra] will be adopted”.
In April, the company said it was working to reduce cancellations in part by taking steps to curb the sharing of passwords by multiple people and also by announcing the launch of a cheaper, ad-supported version of the service.
In the second quarter, Netflix earned earnings per share of $3.20. Revenue grew 9%, despite the appreciation of the dollar. Without considering the exchange rate effect, revenues would have grown 13%, the company said.
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