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
0

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.


WhatsApp to clamp down on ‘sinister’ messages in India

Updated 21 August 2018
0

WhatsApp to clamp down on ‘sinister’ messages in India

NEW DELHI: Facebook-owned WhatsApp assured the Indian government on Tuesday that it would develop tools to combat the problem of fake messages, the country’s information technology minister said.
India has stepped up efforts to crack down on mass message forward after it found that people were using platforms such as WhatsApp to stoke public anger. False messages circulated on WhatsApp have led to a series of mob beatings across the country this year.
WhatsApp chief executive officer Chris Daniels met India’s IT minister Ravi Shankar Prasad on Tuesday, assuring the government of a solution.
Prasad told reporters he had asked WhatsApp to develop a detailed mechanism to trace the origin of any such “sinister” messages.
“It does not need rocket science to locate a message,” Prasad said after his meeting, adding that WhatsApp had said it was working with law enforcement agencies to develop its systems.
A Facebook spokeswoman in India did not immediately respond to a request for comment.
India is WhatsApp’s biggest market with more than 200 million users and one where it says people forward more messages, photographs and videos than any other country.
There are also concerns that supporters of political parties could use social media platforms such as WhatsApp to spread false messages in the run-up to India’s national elections in 2019.
Following calls from the government to stem the platform’s misuse, WhatsApp has moved to deter mass message forward and launched an advertising campaign to educate consumers.
In July, WhatsApp said message forward will be limited to five chats at a time, whether among individuals or groups, and said it will remove the quick forward button placed next to media messages.