Internet television network Netflix (NFLX) late Tuesday missed Wall Street’s target for new subscribers in the first quarter and offered a weak outlook. Netflix stock initially plummeted on the news but later rebounded in extended trading.
The Los Gatos, Calif.-based company added 1.75 million streaming video subscribers in the March quarter vs. forecasts for 2.2 million. It ended the first quarter with 232.5 million total subscribers worldwide.
Most of Netflix’s subscriber growth was in the Asia Pacific region, where it added 1.46 million net new subscribers. In the U.S. and Canada, Netflix added just 100,000 subscribers. Meanwhile, in Europe, the Middle East and Africa, Netflix gained 640,000 subscribers.
However, Netflix lost 450,000 subscribers in Latin America in the first quarter.
Netflix Misses With Sales, Earnings Outlook
Netflix earned $2.88 a share on sales of $8.16 billion in the March quarter. Analysts polled by FactSet had expected Netflix to earn $2.86 a share on sales of $8.18 billion. On a year-over-year basis, Netflix earnings fell 18% while sales climbed 4%.
For the current quarter, Netflix predicts earnings of $2.84 a share on sales of $8.24 billion. But Wall Street was projecting earnings of $3.07 a share on sales of $8.47 billion for the second quarter. In the year-earlier period, Netflix earned $3.20 a share on sales of $7.97 billion.
During after-hours trading on the stock market today, Netflix stock initially fell but later recovered. In recent trades, it was up 0.6% to 335.82. During the regular session Tuesday, Netflix stock rose 0.3% to 333.70.
Popular shows for Netflix in the first quarter included new series “The Night Agent,” “That 90s Show” and “The Glory.” The quarter also brought new seasons of “Outer Banks” and “Ginny & Georgia” as well as movie sequel “Murder Mystery 2.”
In other news, Netflix announced Tuesday that it is ending its U.S.-only, DVD-by-mail rental service after 25 years of operation. It will ship out its final discs to subscribers on Sept. 29.
Netflix Stock Is Tops In Industry Group
Netflix stock has formed a cup-with-handle base with a buy point at 349.90, according to IBD MarketSmith charts.
Meanwhile, Netflix stock ranks first out of 21 stocks in IBD’s Leisure-Movies & Related industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 86 out of 99.
Catalysts for Netflix stock recently have included the addition of an advertising-supported service level and efforts to monetize account sharing.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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