Netflix subscriber slip hints at ‘lumpy’ road ahead for streaming giant

The Netflix logo is seen on their office in Hollywood, Los Angeles, California on July 16, 2018. (REUTERS/Lucy Nicholson)
Updated 17 July 2018
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Netflix subscriber slip hints at ‘lumpy’ road ahead for streaming giant

  • Shares of Netflix fell 13 percent on Tuesday after it reported a surprise shortfall in subscriber additions
  • While Wall Street remains overwhelmingly positive on Netflix and its role in video streaming globally, the numbers did raise question marks over future growth

CALIFORNIA: Shares of Netflix fell 13 percent on Tuesday after it reported a surprise shortfall in subscriber additions for a second quarter marked by the lack of a blockbuster new show and the FIFA World Cup.
While Wall Street remains overwhelmingly positive on Netflix and its role in video streaming globally, the numbers did raise question marks over future growth and six brokerages cut their price targets on the company’s shares.
“The quarter is a reminder that Netflix’s cadence of net adds is not linear, but lumpy in nature,” said Justin Patterson, an analyst with Raymond James and Associates in San Francisco, while pointing to the absence of a new hit series as a driver.
“The company had lots of new content during the quarter; what it did not have was a major new breakout series.”
Riding on the success of its original shows such as “13 Reasons Why,” “House of Cards” and “Orange is the New Black,” Netflix had beaten subscriber growth expectations in seven out of last 10 quarters.
That has driven a doubling of its share price in the last year, raising its value to within sight of $200 billion as of Monday’s close.
What is not clear is where the hurdles to that unbroken run of growth will come from, be it stronger competition from Amazon Prime or the changes in control of major film and TV franchises heralded by Walt Disney Co. and Comcast Corp’s bid for Twenty-First Century Fox Inc. .
Netflix added 5.15 million customers from April through June, 1 million fewer than forecasts from Thomson Reuters I/B/E/S and down from 7.41 million in the first quarter.
“While subscriber weakness is obviously an issue, the company’s inability to explain it satisfactorily could weigh on the stock over the coming quarter,” Barclays analysts said.
Still, there was only one outright cut in a trading recommendation on the stock — by Deutsche Bank to hold from buy — and two others actually upped their recommendations. At least three raised their price targets.
“Netflix has faced hurdles before and this Q2 report won’t be the last,” PiperJaffray analyst Michael Olson wrote.
“The long term potential is too great for us to suggest anything other than buying (the shares),” he added, listing a just 15 percent share of Internet households outside China as a huge potential market.
Olson and several others pointed to the World Cup as a possible distraction in the quarter that might have encouraged subscribers to hold off or freeze subscriptions for a month.
The 2018 soccer tournament that is among the most-watched TV events started on June 14 and has just finished.
“Netflix is in a business that varies by quarter anyway and perhaps the company shouldn’t have gotten too enamored with the crazy success of the last two quarters which was invigorating but not sustainable,” Forrester analyst James McQuivey said.


Twitter blocks accounts of Iranian state media outlets

Updated 21 July 2019
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Twitter blocks accounts of Iranian state media outlets

  • Twitter said the accounts harassed people linked to the Baha’i faith
  • The Baha’i faith is a religious minority that has long faced persecution in Iran

WASHINGTON: A day after Twitter suspended the accounts of several Iranian state media outlets, the social networking service said Saturday it acted after harassment of people linked to the Baha’i faith.
Amid soaring tensions in the region, heightened by Iran’s seizure on Friday of a British-flagged tanker, some of the affected media outlets had speculated that the suspensions were related to their coverage of the seizure.
But Twitter cited what it said was the coordinated and targeted harassment of people linked to the Baha’i faith, a religious minority that has long faced persecution in Iran.
It did not name the suspended accounts, and said it was continuing to investigate the matter.
“Account suspended. Twitter suspends accounts which violate the Twitter Rules,” read English-language messages on each of the Iranian media outlets’ accounts.
Mehr news agency, which is close to moderate conservatives in Iran, said its Farsi-language account appeared to have been blocked late Friday following its reports on the seizure of the tanker Stena Impero in the strategic Strait of Hormuz.
Iran’s Revolutionary Guard said it seized the Swedish-owned tanker for breaking “international maritime rules” in the strait, a chokepoint for around a third of the world’s sea-borne oil.
Mehr’s Farsi-language Twitter page was inaccessible on Saturday, along with those of the official IRNA news agency and the agency of the Young Journalists’ Club.
“Since last night and after seizure of a British tanker in the Strait of Hormuz the account of the Young Journalists’ Club and some other users have been suspended,” the YJC said on its website.
Mehr noted that its Mehr Diplomacy account, which publishes analysis and interviews on foreign policy, was also offline.
Another account taken down belonged to Ali Akbar Raefipoor, a hard-line public speaker.
None of the owners of the suspended accounts said they had been given any reason for the move by Twitter.
The micro-blogging platform is banned in Iran, but many officials still have accounts and people access them by using a virtual private network, or VPN, to bypass censorship.