Netflix’s Stock Crashes Due To Unexpected Rise In Churn
Despite beating estimates on diluted EPS, Netflix’s stock dropped 15% after its subscriber additions fell significantly short of its guidance for the quarter. It should be noted that the company’s subscriber addition guidance after the first quarter earnings was not received well, and Netflix has failed to even match those levels.
While new subscriber additions were good, the company’s churn rate remained notably higher than usual, likely on account of the rate “ungrandfathering” of longer tenured members. The company expects a recovery in Q3, projecting net additions at 2.3 million with top line growth of 36%.
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