Social Distance Netflix
Mike Colter stars in "Social Distance" on Netflix.
  • Netflix fell short of subscriber targets during it third quarter as its massive growth amid the pandemic slowed.
  • The streaming service added 2.2 million paid subscribers, compared with the 3.3 million Wall Street estimated.
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This post will be updated to reflect Netflix’s third-quarter performance when it becomes available.

Netflix fell short of subscriber-growth targets for the third quarter after posting massive growth earlier in 2020.

The streaming company said on Tuesday that it added 2.2 million paid subscribers during the third quarter, compared with the 3.3 million that analysts were expecting.

Shares of Netflix slid as much as 5% during after-hours trading.

The streaming service blew away analyst estimates for subscriber growth during the first two quarters of 2020 as the pandemic fueled streaming viewership.

But Netflix also forecasted that growth would slow significantly during the second half of the year. The company predicted it would bring in 2.5 million paid subscribers during the third quarter, down from the 6.8 million members added during the period last year.

Indeed, website-tracking data from analytics firm SimilarWeb suggested that growth stalled internationally during the June-through-September period.

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Netflix also wasn’t as profitable during the quarter as analysts were expecting. It posted earnings of $1.74 per share, up 18% from last year, but down from the $2.13 analysts estimated. But the company beat revenue targets with $6.4 billion in revenue, a 23% increase from last year.

Netflix said the Asia-Pacific region drove most of its subscriber growth during the quarter, bringing in 1 million paid subscribers.

Netflix added just 180,000 subscribers in the US and Canada. Analysts had been watching to see whether the controversy surrounding the film “Cuties,” which upset some people after it was released in the US, would dent Netflix’s growth in the region. The company did not mention the film in its report.

Looking ahead, analysts wanted to hear more from Netflix on its longterm growth, including its upcoming release slate, plans to increase prices, and productions that are restarting after being halted by the pandemic.

Here are the key numbers to watch from Netflix’s Q3 earnings:

  • Q3 revenue: $6.4 billion, versus Wall Street estimates of $6.38 billion and Netflix’s forecast of $6.33 billion.
  • Q3 earnings per share (GAAP): $1.74, versus Wall Street estimates of $2.13 and Netflix’s forecast of $2.09.
  • Q3 global paid subscriber growth (paid net additions): 2.2 million, versus Wall Street estimates of 3.32 million and Netflix’s forecast of 2.5 million.
    • 180,000 in the US and Canada region, versus Wall Street estimates of 260,510.
    • 760,000 in the Europe, Middle East, and Africa region, versus Wall Street estimates of 1.25 million.
    • 260,000 in the Latin America region, versus Wall Street estimates of 705,340.
    • 1.01 million in the Asia-Pacific region, versus Wall Street estimates of 1.10 million.
  • Q4 global paid subscriber growth estimate (paid net additions estimate): 6 million versus, Wall Street estimates of 6.54 million.
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