Netflix Reports Dramatic Slowdown in Subscribers
Netflix shares fell as much as 11% in after-hours trading after reporting a large miss in subscriber numbers in its first-quarter earnings report. The company also said it only expects to add about 1 million subscribers in the current quarter.
Earnings per share (EPS) came in at $3.75 versus $2.97 expected, according to a Refinitiv survey of analysts. Revenue came in at $7.16 billion versus the $7.13 billion estimate, according to Refinitiv. Global paid net subscriber additions were 3.98 million versus 6.2 million expected, according to Factset.
Netflix said the slowdown in subscriber numbers could be blamed on the ongoing coronavirus pandemic, which forced the company to delay some of its big-name shows and films.
“We believe paid membership growth slowed due to the big Covid-19 pull forward in 2020 and a lighter content slate in the first half of this year, due to Covid-19 production delays,” Netflix said in its letter to shareholders.
Tuesday Recap: Boeing, Travel Stocks Pull Wall Street Lower as Virus Cases Rise
Wall Street’s main indexes fell on Tuesday as a spike in coronavirus cases globally hit travel stocks, while Boeing slid on the unexpected departure of its finance chief.
Seven of the 11 S&P indexes were down, with investors piling into defensive stocks that are considered relatively safe during times of economic uncertainty: real estate, utilities, consumer staples and healthcare.
Shares of airline operators and cruise liners including JetBlue Airways, American Airlines, Norwegian Cruise Line and Carnival Corp, which were hammered last year as widespread lockdowns led to a halt in global travel, fell between 5% and 9%.
United Airlines plunged 8.5% on Tuesday after the carrier reported its fifth consecutive quarterly loss and said that business and international travel is still far from a recovery. The State Department said it would increase “do not travel” advisories to 80% of the world’s countries, adding that the pandemic presents an “unprecedented risk to travelers.”
Volatility on the Rise
The CBOE Volatility Index also known as the VIX or the market’s fear gauge, rose for two consecutive days, landing above 18 after hitting a 14-month low last week.
For a look at all of today’s economic events, check out our economic calendar.