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Netflix adds fewer-than-expected subscribers in second quarter; shares tumble

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Netflix adds fewer-than-expected subscribers in second quarter; shares tumble
FILE PHOTO: The Netflix logo is seen on their office in Hollywood, Los Angeles, California, U.S. July 16, 2018. REUTERS/Lucy Nicholson   -   Copyright  Lucy Nicholson(Reuters)
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(Reuters) – Netflix Inc <NFLX.O> added fewer paid subscribers than expected in the second quarter as the video streaming pioneer raised prices in some of its major markets, including the United States, sending its shares down nearly 10% in extended trading.

“Our missed forecast was across all regions, but slightly more so in regions with price increases,” the company said in statement.

“We don’t believe competition was a factor since there wasn’t a material change in the competitive landscape during Q2, and competitive intensity and our penetration is varied across regions,” the company said.

Globally, the company added 2.7 million paid subscribers, compared with analysts’ estimate of 5.05 million, according to IBES data from Refinitiv.

“While our US paid membership was essentially flat in Q2, we expect it to return to more typical growth in Q3, and are seeing that in these early weeks of Q3,” Netflix said in a letter to shareholders.

The company said it now expects to add 7 million subscribers globally in the current quarter, compared with estimates of 6.5 million, according to IBES data from Refinitiv.

Netflix stock is up 35% so far this year, lagging only Facebook Inc <FB.O> in the FAANG group.

Net income fell to $270.7 million (£217.8 million), or 60 cents per share, in the second quarter ended June 30 from $384.3 million, or 85 cents per share, a year earlier.

Total revenue rose to $4.92 billion from $3.91 billion. Analysts on average had expected revenue of $4.93 billion.

Shares of the company were down about 10% at $325 in extended trading.

(Reporting by Vibhuti Sharma in Bengaluru; Editing by Anil D’Silva)

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