Netflix Falls Short of Q3 Subscriber Targets as Pandemic Boom Cools
Netflix adds just 2.2 million subscribers in the third quarter of 2020, missing its own forecasts and Wall Street expectations as the initial pandemic surge fades.
Netflix experiences a significant slowdown in subscriber growth during the third quarter of 2020, adding only 2.2 million paid users. This number falls short of both Wall Street expectations and the company's own forecast of 2.5 million new customers. The streaming giant also reports net earnings of $1.74 per share, which misses analyst estimates of $2.13, causing its stock to drop 6% in after-hours trading.
The company attributes this decline to a "pull-forward" effect, explaining that record-breaking growth in the first half of the year pulls future sign-ups into earlier quarters. Netflix adds a massive 25.9 million subscribers in the first and second quarters combined as stay-at-home orders drive unprecedented demand for streaming entertainment.
Despite the third-quarter miss, Netflix generates $6.44 billion in revenue, up 22.7% from the previous year, bringing its global total to 195.15 million paid members. For the fourth quarter, the company forecasts 6 million new paid additions, which still puts it on track to reach a record 34 million total net adds for the entirety of 2020.