Yesterday, as part of its third quarter earnings news, Netflix (NASDAQ:NFLX) reported lower new subscriber numbers than previously forecasted. The stock price crashed in after-hours trading, tumbling 25% (more than $100) as Wall Street reacted to the news. Today, the stock price has yet to recover, opening at $332.73, down from yesterday’s closing price of $448.59.
The company 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 a letter to shareholders, Netflix blames the miss on new prices and the fading bump from 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.
Following yesterday’s after-hours sell-off, pundits were quick to point out that the company still has a solid base and should be able to recover from the crash.
Netflix adjusted its forward-looking new subscriber estimate and expects to gain four million new subscribers over the fourth quarter with the bulk of the growth coming from international markets.