Netflix plunges 14% after it misses expectations on revenue and subscriber additions

Reed Hastings co-founder and chief executive of Netflix

In a research note, GBH Insights analyst Daniel Ives called the second-quarter showing "a near-term gut punch" to Netflix. In second quarter past year, Netflix posted $2.79 billion in sales.

The company reported quarterly revenue of $3.91 billion and earnings per share of 85 cents.

Analysts had been modeling $3.94 billion in revenue and EPS of 79 cents. Over the previous eight quarters, the company has on average topped its total net subscriber addition guidance by about 1 million, with three-quarters of that coming from worldwide markets, according to Wedbush Securities analyst Michael Pachter. That's compared with analyst estimates that Netflix would have Q3 net adds of 947,000 in the USA and 5.05 million internationally. Specifically, Netflix is anticipating a net add of 5 million new subscribers for the September quarter, a tad below some analyst projections that saw Netflix bringing 6 million new subscribers on board.

Cash burn - something Netflix has been reducing for the past few quarters - also had a noticeable uptick.

The burn is all part of Netflix's heavy investment in original content and top Hollywood talent. The company will spend as much as $8 billion on programming this year.

"We had a strong but not stellar Q2 (second quarter)", Netflix said in a letter to shareholders. "Internet video is growing globally and we are fortunate to be one of the leaders". Global subscriber growth also fell far short, as Netflix added 4.47 million against an expected 4.97 million.

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