Netflix may be the biggest streaming service in the world, but this didn’t stop the site from seeing a significant drop in its shares this week, due to a misguided calculation of its own subscriber growth.
According to The Guardian, The streaming giant’s shares fell by 14 percent to $346.05 in after-hours trading in New York. Netflix had expected to see a much larger subscriber growth than what was recorded. The lack of growth did not sit well with investors.
Netflix has come forward to claim the low subscriber growth is due to a miscalculation from the inside. The company had expected to add 1.2 million new customers to its streaming service, but instead revealed that it had only added 670,000. This is ultimately a much smaller number.
This wasn’t the only blunder from Netflix as it also missed its expected overseas subscriber approximations by over 500,000. This is not the first case of Netflix making false predictions; the site has run into similar issues three times in the past 10 quarters.
In a letter addressed to its shareholders, Netflix revealed that subscriber growth in the US, for the first six months of this year, is ahead of numbers from the same time last year. However, the letter also explained how in the third quarter subscriber growth would reach 5 million. This is well below Netflix’s expectations of 6.3 million.
This decline in shares comes at a time when Netflix also must keep an eye on potential competitors. Streaming services are the way forward and sites such as Amazon and Apple are eager to move up Netflix’s heights. The streaming service claims that it is aware of increasing competition and is tackling these concerns by focusing its investments on foreign markets, most notably India.
Netflix’s lack of growth this quarter is thought to simply be down to a weaker line-up on new shows, than what was released at this time last year. Last year, some of Netflix’s more popular series’ such as Orange Is the New Black, House of Cards, Bloodline, Unbreakable Kimmy Schmidt, and Master of None released new seasons. This Spring, though, only one popular show 13 Reasons Why released a new season and it did not receive it’s expected praise and reviews.