Netflix Underperformed in the Second Quarter
Just when you expect that domestic technology would thrive during the pandemic’s lockdown, Netflix stocks fall. The Los Gatos, California-based streaming giant failed to meet market expectations on its earnings report during after-hours on Thursday.
In the announcement, Netflix saw a massive surge in new subscriber count throughout the second quarter of 2020. In fact, it saw more than 10 million new subscribers three months into the pandemic. This topped the second consecutive time it reached the 10-million mark.
The added global paid net subscribers were expected to be 8.2 million prior, which meant the figure also surpassed expectations.
Net earnings came in at $720 million or $1.59 a share. Last year, during the same quarter, net income was $270.7 million or 60 cents a share.
Meanwhile, revenues came in much better than Wall Street estimates this quarter. Against the $6.08 billion expectations from market experts, the firm saw $6.15 billion in earnings.
Led by uncertainties from reopening cities around the world, Netflix provided lower guidance for the next half of 2020. Third-quarter revenue guidance was at $6.33 billion, below estimates of $6.40 billion. Earnings per share, however, was higher at $2.09 per share against expectations of $2.01.
The lower estimates were due to its net subscriber growth for Q3: 2.5 million against 5.27 million.
Netflix Welcomes Its New Co-CEO, Ted Sarandos
During the earnings call last night, Netflix also announced other big news, which stirred the stock market. Ted Sarandos is now co-chief executive officer of the company along with his co-founder Reed Hastings.
Hastings welcomed his partner with open arms in a letter to shareholders. He said that Sarandos was merely getting the label for the role he already played. Although, the letter doesn’t say if the promotion was effective immediately.
Nothing much is going to change, as the company blog said, with day-to-day running. Key executive leaderships remain unchanged. As far as the announcement states, the promotion only formalizes how he already runs the company.
Hastings also pointed out that this was a part of a long process of succession planning. Signs point to the possibility of the current CEO preparing to leave, but it looks like this won’t happen soon.
In the same blog post, he was quick to correct assumptions claiming that he will be in for a decade.
Sarandos joined Netflix in 1999 and has been with the company for more than 20 years. He was the company’s chief content officer, who brought Netflix to be among the biggest names in Hollywood. He has also been integral to the company’s transition from its DVD mail service into becoming an iconic online giant.
