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Netflix plummets after shock fall in user signups

Last updated: 09:22 19 Jul 2016 EDT, First published: 04:22 19 Jul 2016 EDT

Kevin Spacey stars in Netflix series House of Cards
A house of cards?

Netflix Inc (NASDAQ:NFLX) plummeted around 13% in Tuesday’s pre-market dealing after an unexpected slowing in customer growth.

The leading online video streamer added 1.7mln new accounts in its second quarter, which left it someway short of a projected 2.5mln for the three month period.

Nevertheless Netflix still has a mass of 83mln users. And it managed to meet revenue forecasts for the second quarter and beat market consensus for profit.

The slowing in user growth comes after Netflix raised its prices and as it faces increasing competition from Amazon’s Prime Instant Video service, which recently switched from an annual to monthly sUBScription model.

Netflix’ Nasdaq quoted shares gave up more than US$13, 13.5%, to around US$98.80 ahead of the opening bell.

Not only is the stock selling off, Wall Street brokers have this morning swung the axe.

Citigroup has cut its price target to US$92 from US$106, while Nomura cuts its marker to US$100 per share from US$115.

Goldman Sachs, meanwhile, stuck with a ‘buy’ recommendation whilst cutting its target to US$115 from US$120.

UBS took a bigger slice off its target, reducing to US$92 from US$130.

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