Netflix reported a better than expected report of its 1st quarter earnings, rising back from the customer backlash that escalated in the 1st quarter but the company didn’t do enough to calm down concerns about its ability to deal with increasing competition.
The company released its 1st quarter results on Monday and its forecast of the coming months. However, it was obvious that Wall Street was concerned by the company about dealing with new challenges. Based in Los Gatos California, Netflix reported a first quarterly loss in 7 years in the three months that ended last month. However, the reported loss was less than the expectations of analysts. Investors, however, remained concerned about the company and rather than focusing on its positives that were evident in the report, investors focused on the 2nd quarter forecast estimated by the company.
Netflix has forecasted a slowdown between April-June but this quarter is always slow for the company because of warm weather and daylight that discourages them to stay inside and watch TV/movies as cold weather does. Weather was the main reason cited by Netflix for its next quarter’s forecast. Netflix said that it might add only 200,000 new subscribers in the United States in the 2nd quarter of the year, after it added 1.7 million customers during the starting three months of 2012. Netflix revealed its maximum potential of potential subscribers, saying that it might add 800,000 video stream subscribers in the largest economy in the 2nd quarter of the year. However, this number is also smaller than the 1.8 video subscribers the company added in the 2nd quarter of last year. The number is also less than the number of subscribers the company added in the 2nd quarter of 2010.
After the report, shares of the company dropped by 17 percent, settling at $84.90 in extended trading on Monday.