Netflix Earnings Preview: Significant Slowdown In Domestic Streaming Subscriber Growth Will Be The Highlight
Netflix is scheduled to release its Q3 2016 earnings on October 17th, and the significant slowdown in streaming subscriber additions will once again be at the forefront of investors’ minds. In the June quarter, the company’s subscriber additions fell significantly short of its own guidance, which was conservative to start with. This led to Netflix’s stock crashing 15% despite posting better than expected earnings. The company’s guidance for subscriber additions for the third quarter is again not too promising and there’s a risk that it might not have been able to meet the target.
Netflix is nearing a saturation point in its domestic market and relying on international expansion for a bulk of its subscriber growth. However, the company expects subscriber additions in international markets to have slowed down notably in the third quarter, which can be attributed to the fact that the service is no longer expanding in new geographies since it is already present in 190 countries. Growth in international streaming subscriber henceforth will come from expansion in the existing markets, and therefore, it won’t be as strong as before.
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