Analysts had expected the online video shop to earn $0.08 per share, off revenue of $1.75 billion.
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For the quarter ended September 30, Netflix reported 69.17 million streaming subs.
But Netflix didn’t gain as many USA subscribers during the latest quarter as management anticipated, a shortfall that it blamed on an unusually large number of accounts that were cancelled because their credit cards couldn’t be charged.
In video-conference session Tuesday, chief content officer Ted Sarandos indicated that Netflix is also interested expanding into news programming.
Management had guided for 1.15 million net adds in the U.S. They cited the transition to chip-based credit and debit cards as the reason for their over-forecast in the US because the miss was because of involuntary churn caused by the company’s inability to charge customers’ credit and debit cards.
Among Netflix’s original programming are “Orange is the New Black”; “Narcos”, a 10-episode series on Colombian cocaine king Pablo Escobar; and “Beasts of No Nation”, the company’s first feature film that will be released on October 16 on Netflix and in select USA theaters. Netflix’s expansion, however, has come with higher costs and greater exposure to currency volatility. Shares had risen about 14% over the last month.
Netflix’s forecast “was high for the U.S. and low for worldwide”, CEO Reed Hastings and CFO David Wells say in a quarterly letter to investors. The shares slumped as much as 11 percent, and the stocks of hospital chains Community Health Systems Inc. and Tenet Healthcare Corp. also tumbled. Netflix last week raised the price of its most popular plan by $1 for new members in the United States, Canada and Latin America, a similar increase it implemented in Europe in the summer. Its free cash flow declined $252 million in Q3 – vs a fall of $229 million in Q2.
Netflix said it added 3.6 million customers over the past three months as it readies launches next week for Spain, Italy and Portugal, and predicted it would end the year with 74 million.
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The firm said revenue rose to $1.74bn (£1.1bn) from $1.41bn a year earlier.
