The shares of Netflix are trading in the red zone in the early hours of Wednesday after the company reported its second-quarter 2021 earnings.
Netflix Subscribers Increase Massively in Q2
Entertainment giant Netflix presented its earnings report yesterday with some interesting data reported by the company. Analysts had estimated that Netflix would add 1.19 million new paid subscribers in the second half of the year. However, the company surpassed that mark after adding 1.54 million new users.
Netflix now has over 209 million paid subscribers globally. The growth has decreased over the past year. The roll-out of vaccines means that more people are resuming their daily activities, and some have no need for Netflix subscriptions for now.
For the third quarter of the year, Netflix expects to add 3.5 million new users. The optimism stems from the company’s slate of content, with most of its movies and TV shows expected to be released earlier this year were pushed back to the second half of 2021 and next year.
In the first half of 2021, Netflix spent $8 billion on content and expected to add another $4 billion in the second half of the year. Netflix stated that if it achieves its forecast, it would have added over 54 million paid subscribers in the past 24 months.
Netflix Misses Earnings Expectations, Stock Price Slips
Despite recording a better-than-expected addition of paid subscribers, Netflix missed its earnings expectations. The earnings per share (EPS) was $2.97 compared to the $3.16 expected by the Refinitiv survey of analysts.
The company didn’t disappoint in terms of revenue. The Q2 revenue was $7.34 billion vs. $7.32 billion expected. Despite that, the shares of Netflix dropped following the earnings report. NFLX is down by 0.23% in the early hours of Wednesday and is trading at $531 per share.
Year-to-date, NFLX has underperformed. The stock began trading at $540 per share at the start of the year but has dropped after reaching a yearly high of $586 in January.