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Despite User Growth, Netflix Shares Fell on Profit Miss

  • Netflix posted a $720 million profit on revenue of $6.1 billion in the quarter recently concluded, compared to a $709 million profit on revenue of $5.8 billion in the first three months of the year.
  • Wall Street analysts had anticipated stronger profit, especially as people who are at home due to the coronavirus pandemic turn to the company’s streaming service for entertainment.
  • In a letter to shareholders, Netflix said that while its lineup of original shows for this year is on track, the company is concentrating on getting production back up and running safely.
  • Visit The Financial Today’s homepage for more stories.

Netflix shares fell Thursday after a nearly flat quarterly profit posted by the leading streaming company amid growing subscriber numbers.

Netflix posted a $720 million profit on revenue of $6.1 billion in the quarter recently concluded, compared to a $709 million profit on revenue of $5.8 billion in the first three months of the year. Wall Street analysts had anticipated stronger profit, especially as people who are at home due to the coronavirus pandemic turn to the company’s streaming service for entertainment.

Paid memberships grew by 10.1 million, but Netflix warned shareholders that growth could slow as sheltering-in-place undoubtedly exacerbated the number of new customers entering the service—meaning people hurried to enter in the early months as lockdowns started, rather than spreading over the year.

Shares rapidly plummeted more than 10 percent in after-market trades that followed the announcement of earnings figures.

In a letter to shareholders, Netflix said that while its lineup of original shows for this year is on track, the company is concentrating on getting production back up and running safely.

“As the world slowly re-opens, our main business priority is to restart our productions safely and in a manner consistent with local health and safety standards to ensure that our members can enjoy a diverse range of high-quality new content,” Netflix executives said in the letter.

“There is no one-size-fits-all approach, and we’re adapting to local circumstances. Today, we’re slowly resuming productions in many parts of the world.”

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