After-Hours Blues: Netflix Stock Falls 10 Percent On Warnings Of Slower Growth
July 25, 2011 at 22:43 PM EDT
Tonight, it looks like Netflix is singing the after-hours blues. At the time of this writing, the company's stock has plummeted more than 28 points in after hours trading, a 10 percent overall drop. While Netflix posted another strong quarter this afternoon, with net income up to $68 million in Q2 from $60 million in Q1 and $788.6 million in revenue, up 52 percent, there were some caveats. As my colleague Erick Schonfeld wrote earlier today, "Wall Street still isn’t happy with the slowdown in store for the third quarter". And why is that? Netflix's much-talked-about price change goes into effect in the third quarter, and should be fully rolled out, Netflix estimates, by September 15th. As a result, Netflix expects "domestic net additions in Q3 to be lower than the previous year's Q3, and because of the timing of the price change, revenues will only grow slightly on a sequential basis". That means: Investors, temper your expectations for the next few months. (Or, as we've seen from this afternoon's activity, "sell it like it's stolen".)