UPDATE: On 10/16/2014, the stock opened down 25%.
Netflix today reported a third-quarter profit of $59 million, up from $32 million a year ago. But the company failed to attract as many new subscribers as it had predicted, calling it “over-forecasted” on membership growth.
In after-hours trading the stock (NASDAQ:NFLX) plunged more than one hundred dollars (over 23%) to 339 on the news.
“We over-forecasted membership growth,” Netflix said in a letter to its shareholders. The company added just one million new members in the US, with an additional two million coming from international markets. In all, Netflix now has 53.06 million members in both domestic and international markets.
Netflix attributes the miss to new prices and the fading of the positive reaction to its hit series “Orange is the New Black” before the third quarter. “As best we can tell, the primary cause is the slightly higher prices we now have compared to a year ago. Slightly higher prices result in slightly less growth, other things being equal, and this is manifested more clearly in higher adoption markets such as the US,” the company said.
Going forward, the company has factored the higher prices into its Q4 member forecast, but that hasn’t stopped Wall Street from selling off the stock in after-hours trading.
The news HBO is about to enter the streaming space probably didn’t help anything either.
UPDATE: On 10/16/2014, the stock opened down 25%.Featured Image: AP Photo/Paul Sakuma