It seems as if Netflix (NASDAQ:NFLX) just cant get a break these day as already annoyed shareholders dumped their stock today following the company’s third quarter financials.
The online streaming giants recent and unpopular move to increase its prices in July has led to an even greater exodus of subscribers than experts anticipated and the company now predicts that even more customers could drop their services over the next few months. The hemorrhage of customers is expected to lead Netflix to post losses next year even though it rolls out its services in the United Kingdom and Ireland. Those predicted losses have forced Netflix to stall further expansion plans overseas until its returns to profitable ways.
Netflix lost 800,000 subscribers from June to the end of September, more than the 600,000 that it had predicted in last months forecast. The company had 23.8 million subscribers at the end of September. As the company will now force customers to choose between the the DVD-by-mail service or its online streaming segment as the two services are to be charged separately. That will likely force a decline in DVD subscriptions as more people move towards the ease of online streaming. The company predicts DVD subscribers will fall from 13.9 million as of September 30th to as low as 10.3 million by the end of the year. Netflix does anticipate that streaming subscriptions in the U.S will rise by as much as 100,000 over the current quarter.
For the three months which ended on September 30th Netflix reported earnings of $62.5 million, or $1.16 per share, up from $38 million, or 70 cents per share last year and well ahead of analyst estimates of 96 cents per share.
Revenue jumped 49 percent to $822 million, ahead of the $813 million Wall Street expected.
Several analysts went on to downgrade the stock. JP Morgan dropped its rating to ‘Neutral’ from ‘Overweight’, Citigroup dropped Netflix to ‘Neutral’ from ‘Buy’, Goldman Sachs went from ‘Buy’ to ‘Neutral’, Janney Montgomery dropped it to ‘Sell’ from ‘Neutral’ and Susquehanna dropped its rating to ‘Negative’ from ‘Neutral’.
Netlix has dropped over 34.7 percent today to its current price of $77.53 per share.
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