Netflix Misses Q3 Sub Growth Projection By 300,000; Stock Drops

As expected, Netflix subscriber growth cooled in the third quarter that ended Sept. 30, with the SVOD leader adding 2.2 million subs worldwide — lower than a company projection of 2.5 million. Wall Street had projected 3.26 million net sub additions. Netflix added just 180,000 net subs in North America, down from more than 600,000 subs in the previous-year period.

The streamer, which added 6.77 million subs in the previous-year period, ended Q3 with 195.1 million subs worldwide.

“We think this is primarily due to our record first-half results and the pull-forward effect,” co-CEOs Reed Hasting and Ted Sarandos wrote in the shareholder letter.

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The executives made no mention of the controversial French-language movie Cuties, which resulted in a social media backlash and legal fallout after a Texas grand jury indicted Netflix on criminal charges, alleging that the service streamed “lewd material of children” in the movie. Analysts contend Netflix lost upwards of one million subs due to the issue.

Still, Netflix remains ahead of 2019 through three quarters with 28.1 million new subs in 2020 compared to 27.8 million new subs in 2019. The streamer is projected to add 6 million new subs in the current quarter ending Dec. 31, down from 8.76 million new subs in the previous-year period.

Revenue increased 22.7% in the third quarter to $6.43 billion, from $5.24 billion in the previous-year period. Net income reached $790 million, from $665 million last year. Regardless, investors were quick to respond, sending Netflix shares down around 6% in aftermarket trading.

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