Apr 16, 2019 - Technology

Netflix stock bounces on weak Q2 guidance

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Netflix's stock was down over 6% on Tuesday, immediately after it delivered weak Q2 guidance to investors in its first quarter earnings report. The stock rebounded minutes later, bringing Netflix's stock down only marginally from where it was before earnings.

Why it matters: Normally, when Netflix beats estimates in earnings, revenue and subscriber additions, its stock would skyrocket, especially amid reports of rival streaming services launching in the marketplace. But investors were bearish on the fact that Netflix says its estimated Q2 earnings per share would be $0.55 compared to the $0.99 analysts were expecting.

By the numbers: per CNBC:

  • Earnings per share: 76 cents, vs. 57 cents expected, according to Refinitiv consensus estimate.
  • Revenue: $4.52 billion, vs. $4.5 billion expected, per Refinitiv consensus estimate.
  • Domestic paid subscriber additions: 1.74 million, vs. 1.61 million, forecast by FactSet
  • International paid subscriber additions: 7.86 million, vs. 7.31 million, forecast by FactSet

Details: The stock initially sunk after the company projected its second quarter earnings per share to be nearly half of what investors anticipated and that paid membership additions would to be less than Wall Street's expectations.

  • Yes, but: Netflix has a traditionally slow Q2, which could have investors feeling slightly more optimistic about the guidance.
  • Netflix says it anticipates a net add of 5 million paid subscribers for the second quarter, which is below Wall Street’s expectations for 6.09 million new paid members.

What's next: Netflix will hold a video Q&A presentation for investors at 6:00 pm ET.

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