Netflix, Inc. (NASDAQ:NFLX) Spooks Investors Over Slow Growth

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Netflix

Netflix, Inc. (NASDAQ:NFLX) is targeting over a 100 million subscribers even as CEO Reed Hastings insists they face major growth headwinds on the international front.

Netflix is already reaping the fruits of an expansion drive that has taken it to 130 new markets. Revenues for the first quarter came in at $1.96 billion up from $1.57 billion posted last year.

Growth Concerns

Amidst the expansion drive, CEO Reed Hastings has warned that international growth could slow in the second quarter. It was the last thing investors wanted to hear at the earnings call seen by the stock plunging 12% in after-hours trading.

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Netflix added 6.74 million in the first quarter with four million of the new subscribers coming from abroad. The company’s subscription currently stands at 81 million users, a feat that makes it the largest streaming service in the world.

For the second quarter, the company expects 500,000 new domestic additions against Wall Street estimates of 586,000 new members. On the international front, the company expects 2 million new membership gains, against the street’s estimates of 3.5 million new members. Slow growth on the international front further compounds concerns about the slowing US expansion.

Growth patterns have been erratic even as the streaming giant continues to expand to new markets. Having launched in a good number of big global markets the company has now set its eyes on China. Launching in China should be a big achievement for Netflix given the country’s massive population that could help take its subscription base to another level.

Shrugging Off Competition

Expanding abroad is no longer an option for Netflix having come under pressure back at home. Amazon.com, Inc. (NASDAQ:AMZN) has emerged as a fierce competitor having repositioned Prime Video as a standalone service in a bid to take the streaming giant head on.

Hastings has already downplayed the threat posed by Amazon reiterating that they are working hard on building some of the best content able to shrug off competition.

“We’re seeing growth in the internet TV market and that’s displacing linear TV,” he added. The increased competition was “all part of the natural evolution from linear TV to internet TV,” said Mr. Hastings.

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