Just two weeks after announcing a price adjustment that angered many customers, Netflix came out Monday with a weaker-than-anticipated earnings outlook.
While the entertainment distributor reported a 52 percent rise in second-quarter revenue, it also reaffirmed a temporary slowdown in subscriber growth and said that its third-quarter revenue would be hampered by reactions to the price change. Netflix stock, which peaked above $300 earlier this month, dropped 10 percent in after-hours trading Monday, after closing at $281.53 earlier in the day.
Netflix posted second-quarter revenue of $789 million, up 52 percent from the same quarter last year. It said its profit for the quarter was $68 million, up 55 percent.
For the third quarter, Netflix said it expected revenue to be $799.5 million to $828.5 million, which was lower than previous projections on Wall Street.
The price adjustment, announced July 12, takes Netflix’s DVD-by-mail service, which was a $2 add-on to its $8-a-month online streaming service, and makes it a separate $8 package. For Netflix, the online streaming service, which remains $8, is growing much faster than DVD-by-mail. But some customers were outraged by what was effectively a 60 percent price increase for the combined service.
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