Netflix just released its financial results for the second quarter of 2019, and a number that jumps out is that its service grew by 2.7 million subscribers. That’s a problem for shareholders because in its last report, the company predicted it would be up about 5 million in Q2, and in the US it actually lost more subscribers than it added for only the second time ever, dropping by 130,000.
CEO Reed Hastings blamed the stagnancy on the company’s price hikes, and a lack of original content to bring in new subscribers. The company instituted higher pricing plans in January, one of its biggest increases to date. Plan changes went into effect for both new and returning subscribers. As such, paid memberships in the United States were “essentially flat.”
“Our missed forecast was across all regions, but slightly more so in regions with price increases,” Hastings wrote in his letter to shareholders. “We don’t believe competition was a factor since there wasn’t a material change in the competitive landscape during Q2, and competitive intensity and our penetration is varied across regions.”
The news has led to an immediate stock drop for the company. Hastings’ letter to investors argues that the company’s next two quarters will see growth because of new seasons of Netflix successes like Stranger Things, The Crown, and Orange is the New Black, which is getting a final season.
