Year-over-year subscriber growth of 87% didn’t cut it Friday for Netflix investors, who sent the DVD rental company’s stock plunging by more than 10%. Company announced Thursday that its subscriber total increased 8% in the second quarter to 2.09 million, which represented the high end of its guidance. Increase came despite a $2 monthly subscription price hike to $21.95.
But Wall Street analysts had been expecting the high-flying company to keep up its breakneck pace of previous quarters and beat guidance.
Instead, analysts worried that Netflix’s churn — the rate at which it loses existing subscribers — was on the rise, a good sign for competitors such as Wal-Mart and Blockbuster.
Investors seemed worried that was a bad sign for Netflix’s future as it gears up to meet a goal of 5 million subs by 2006 despite the impending launch of a competing Internet service from Blockbuster.
Full details on what the newest subscriber numbers indicate for Netflix will come July 15 when company reports its second quarter financial results.
Shares closed at $32.31 Friday, down 10.13%.