Netflix’s shares are plunging on Wall Street at the moment, on the back of some subdued company guidance. Netflix isn’t forecasting the same tremendous subscriber growth that it saw last year, and there’s one big reason why — its Aussie launch in March last year added a huge number of customers at once, and that kind of growth can’t continue forever.
Netflix image via Shutterstock
The news comes to us from our friends at Business Insider Australia, covering Netflix’s quarterly earnings report. While Netflix’s first quarter results for the 2016 financial year were strong, guidance for subscriber growth in the second quarter is comparatively subdued, especially in Australia when the massive launch growth spike is taken into account:
Our international forecast for fewer net adds than prior year is due to a tough comparison against the Australia/New Zealand launch. The ANZ growth spike in Q2 last year resulted in international Q2 net adds more than doubling year over year (from 1.12 million to 2.37 million).
While ANZ is growing steadily this Q2, it is less than the launch spike last year. ExANZ, international net adds would be forecast up this quarter. International net adds are down sequentially both due to standard seasonality and our launch in 130 countries at very beginning of Q1 (so Q1 captured the initial surge of signups).
Netflix forecasts an international subscriber growth of two million users for Q2, a long way off Wall Street’s widespread expectation of 3.45 million. It’s that that is causing the company’s shares to take a tumble, but it seems the market’s expectations were unreasonable given the substantial fanfare that Netflix’s Aussie launch received and the number of customers that quickly jumped on board.