Netflix Q3 Paid Net Adds Miss Forecast; Stock Down

Netflix had 2.2 million net paid subscriber additions in Q3, about 300,000 short of its July 16 forecast, said the company Tuesday. Q3 net paid additions declined 78% from Q2 and 68% from the 2019 quarter. Netflix is forecasting 6 million net subscriber adds for Q4, which would be a 32% decline from the 2019 quarter. The slowdown in growth was expected, management wrote shareholders: “We think this is primarily due to our record first half results and the pull-forward effect we described in our April and July letters.” Subscriber “retention remains healthy and engagement per member household was up solidly year over year in Q3,” it said. “The state of the pandemic and its impact continues to make projections very uncertain, but as the world hopefully recovers in 2021, we would expect that our growth will revert back to levels similar to pre-COVID.” Paid net adds are likely to be down year over year in the first half of 2021, “as compared to the big spike in paid net adds we experienced in the first half of 2020,” it said. Netflix management is “thrilled to be competing with Disney and a growing number of other players to entertain people,” it said. “Consumers and content creators will benefit from our mutual desire to bring the best stories to audiences all over the world.” Netflix stock fell 5.4% to $497.11 at 4:37 p.m. EDT.