Netflix (NASDAQ:NFLX)shares tumbled Tuesday as the market opened suggesting investor concerns over the streaming provider’s softened subscriber forecast for the current quarter.
Netflix was down more than 11% to $96.36 in early trading Tuesday, the day after the company said it expects to add about 2.5 million subscribers from April to June, less than half as it did last quarter, in its earnings report.
Netflix barely missed on Wall Street expectations for Q1 revenue, reporting revenue of $1.96 billion, just short of the consensus estimate of $1.97 billion in revenue from analysts polled by S&P Global Market Intelligence. It beat earnings per share expectations delivering 6 cents, compared to the 3 cents a share estimate. Netflix had forecast revenue of $1.966 billion, up 25% from the same period last year.
Subscriber additions of 6.7 million marked Netflix’s largest quarter of growth ever and net income of $28 million surpassed that of $24 million from the same period a year ago. However, Netflix delivered a Q2 net income forecast of $9 million, compared to $26 million in the same period last year.
About virtual reality and augmented reality and its potential for Netflix, CEO Reed Hastings said that’s way down the road. “I think it’s mostly going to be an intense gaming format for a couple years,” he said. “And then everybody hopes that it matures into something that’s lower cost and more ubiquitous. So I don’t think it will have a direct effect on us in the next couple years because I think the center point for VR will be other sorts of things than watching a TV show in a VR headset. I don’t think that will be very popular.”
Hastings closed the call by reminding analysts of an upcoming milestone for the service: “We cannot wait to breakthrough 100 million subscribers sometime next year,” he said. “It’s going to be a big celebration. We’re looking forward to it.”