Yahoo Finance Netflix shares plunge as it says pandemic video boom won't last
Netflix shares have fallen sharply after it revealed that the record growth the streaming giant has seen during the pandemic will not last.
The US video company revealed that more than 10m households had signed up to its monthly service in the three months to the end of June, sending total subscriber numbers above 192m.
However, it forecast that growth would plummet to 2.5m subscribers in the current quarter, sending shares down by more than 10pc in after-hours trading.
The figures suggest that while the coronavirus outbreak has meant more subscribers in the first half of the year as locked-down households turn to video streaming, many of these are simply signing up earlier than they might have.
“We’re expecting paid net adds will be down year over year in the second half as our strong first half performance likely pulled forward some demand from the second half of the year,” the company said.
It came as Netflix revealed that its content chief Ted Sarandos, who has been responsible for its massive drive into original video, would become co chief executive alongside founder Reed Hastings.
“Ted has been my partner for decades. This change makes formal what was already informal - that Ted and I share the leadership of Netflix,” Mr Hastings said. The move is a potential precursor to Mr Hastings stepping down.
The company said revenues were up 25pc year-on-year, slower than subscriber growth, since many new customers are in countries that pay less than in Netflix’s US base.
Despite the slump, shares have still risen by more than 40pc this year, valuing the company at over $200bn.
Netflix has also faced the prospect of a shortage of new titles as the ongoing crisis shuts down production. It said last night it was slowly resuming production in Asia and Europe, but that Hollywood titles faced more uncertainty.
