Netflix released its Q2 2020 earnings on July 16th and, despite crushing expectations, saw its stock drop because of weak Q3 guidance.
According to Business Insider, the streaming giant added 10.1 million paid subscribers in the second quarter. Wall Street expected 8.3 million. However, Netflix forecasted it would add only 2.5 million new subscribers in Q3.
By comparison, the company pulled in 6.8 million subscribers in Q3 2019.
Netflix expects the impact of the pandemic and stay-at-home orders to decrease, which will lead to lower subscriber numbers in Q3. The streaming giant’s shares tumbled 12 percent in after-hours trading following the news.
The company also missed on earnings per share (EPS), coming in at $1.59 USD compared to the $1.81 expected by analysts. However, Netflix beat revenue with $6.15 billion USD compared to an expected $6.08 billion (about $8.33 billion to $8.23 billion CAD).
In a letter to shareholders, Netflix executives also counted TikTok among its competitors but said it would “continue to stick to [its] strategy of trying to improve [the] service and content every quarter,” and do so faster than others.