Netflix: Is the streaming giant losing its momentum?

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Netflix shares (NASDAQ: NFLX) are down over 5% in pre-market trading after the group reported few subscribers than expected in this year’s third quarter.

Analysts predicted 3.4 million subscribers in the three months to 30 September, however, the streaming giant revealed just 2.2 million.

As lockdown eased, the competition heats up, and live sport returns, Netflix saw the slowing down of new subscribers that had remained so high over the course of the pandemic.

As people were stuck at home, Netflix saw huge growth over the past year and its share price surged 70%. During the first nine months of 2020, the streaming company added 28.1 million paid memberships – more than the total number throughout the whole of the previous year.

Whilst revenue also slowed down, the group still posted $790m (£610m) in net profits – an increase from last year’s $665.2m (£514m).

Netflix said: “We continue to view quarter-to-quarter fluctuations in paid net adds as not that meaningful in the context of the long-run adoption of internet entertainment, which we believe is still early and should provide us with many years of strong future growth as we continue to improve our service.”

The group has forecast six million new paid memberships over the final three months of the year, bringing the 2020 total to 34 million.

In the trading update, Netflix 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.

“We continue to view quarter-to-quarter fluctuations in paid net adds as not that meaningful in the context of the long run adoption of internet entertainment, which we believe is still early and should provide us with many years of strong future growth as we continue to improve our service.”

Netflix shares (NASDAQ: NFLX) are 5.12% down in pre-market trading (1123GMT).