Shares in Netflix fell sharply on Friday after the streaming giant reported lower-than-expected second quarter revenue and meager expectations for new subscribers.
Netflix stock was down roughly 8 percent shortly after the market opened Friday.
Despite beating expectations for revenue and global subscribers, the streaming service fell short of the earnings per share expected by analysts. Netflix also said it expects 2.5 million net subscriber additions for the third quarter, far less than the 5.27 million projected by analysts, according to CNBC.
After sharply declining with the rest of the stock market in March, shares of Netflix have climbed steadily throughout the coronavirus pandemic.
With most of the U.S. population confined largely to their homes for entertainment, lockdowns fueled a wave of subscriptions to Netflix and other streaming services.
Netflix executives said in a Thursday letter to shareholders that the company added 26 million new subscribers in the first half of 2020 after landing 12 million during the same period in 2019.
That surge likely pulled from new subscriptions that would have started in the second half of 2020, the executives explained, limiting the company’s growth potential for the balance of the year.
“Growth is slowing as consumers get through the initial shock of Covid and social restrictions,” they wrote. “Our strong first half performance likely pulled forward some demand from the second half of the year.”
While the market opened with small gains despite Netflix’s sharp drop, all three major U.S. indexes were in the red less than an hour after the market opened.
The Dow Jones Industrial Average was down 72 points, roughly 0.3 percent, after opening with a gain of around 60 points. The S&P 500 index and Nasdaq composite were down 0.2 percent and 0.4 percent, respectively.