In January, down-and-out tech stock Netflix (Nasdaq: NFLX) got a much-needed boost from a promising fourth-quarter earnings report. The company’s latest earnings announcement has had the opposite effect.
Like its previous earnings report, Netflix’s first-quarter earnings managed to surpass analyst estimates. But unlike last time, the stock is getting hammered. In a scene that’s reminiscent of last fall, Netflix shares have plummeted 13% today, bumping the stock all the way down to $88 a share – the lowest it’s been since early January.
The problem was a lousy sales outlook. The company is forecasting between $873 million and $895 million in sales in the second quarter, below the $897 million most analysts were looking for. Apparently Wall Street investors didn’t take that news lightly.
Still, there were some encouraging numbers in Netflix’s report. The online video streaming company added 1.7 million streaming subscribers in the U.S., and another 1.2 million subscribers overseas – an area the company is hoping to grow rapidly. Its DVD-by-mail subscriber numbers fell from 11.2 million in the fourth quarter to 10.1 million last quarter.
But the company does say a return to profitability in the second quarter is possible. That would be a nice return to form after the company lost 8 cents a share last quarter. Netflix turned a profit of 73 cents a share in the fourth quarter.
It’s been a rough nine months for Netflix. A series of missteps by owner and founder Reed Hastings – including a significant price hike and an ill-advised attempt to split into two websites – sent the tech on a downward spiral late last year. The stock fell from a high of $304.79 a share in mid-July all the way to $63.86 by November 25.
Now Netflix shares are falling again.