Weak customer additions weigh on Netflix shares

At the time of writing, Netflix shares had dropped to $85.58 in after hours trading from a closing price of $98.39.

The US-based streaming video provider announced yesterday it added significantly lower subscribers between April and June than what it, and Wall Street analysts, had expected.

"And with the increases revenue, we're continuing to invest in better and better content", Netflix CEO Reed Hastings said in a conference call with investors on Monday.

Subscriber cancellations rose "slightly and unexpectedly" ahead of higher charges for existing users.

The fallout from those phased-in price increases has been compounded by intensifying competition that now provide consumers an array of alternative streaming-video options. Net income rose 58 percent to $41 million, surpassing expectations of $9.65 billion.

This news overshadowed the movie-streaming company's earnings results that beat analysts' expectations on Monday. Revenue came in at $2.105 billion vs. Wedbush's already-downsized estimate of $2.155 billion; consensus also estimated at $2.11 billion.

Netflix is available in over 190 markets around the world, and the company counted 1.5 new subscribers outside the USA in the second quarter. That's a substantial increase from the $1.64 billion that the company amassed during the same period previous year, but the lack of growth in the company shows that investors are anxious Netflix may have hit its peak. In the wake of the report, at least 19 analysts reduced their price targets for Netflix's stock or decreased their long-term growth estimates for the company, according to Thomson Reuters.

Earlier this year, Netflix reminded its oldest users that the terms of its grandfathered pricing - which kept these subscribers at the $7.99 level for two years - would be coming to a close sometime in the second or third quarter of 2016.

The online streaming corporation ended the second quarter with 83.18 million subscribers all over the world, including 36.05 million in global markets and 47.13 million in the United States. The reality is most people still find Netflix to be an incredible value in the age of soaring legacy cable TV prices, and the company still has some leg room on both worldwide growth and pricing.

"We think some members perceived the news as an impending new price increase rather than the completion of two years of grandfathering", Netflix said in a statement. Not only does the company still lead its main streaming rivals, Amazon and Hulu, it has made and renewed solid content deals.

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