Netflix Q2 Results Beat Estimates, Olympics To Cause A Loss in Q3

Shares of Netflix Inc. (NASDAQ:NFLX) plunged 14.5 percent, to $68.73, in Tuesday's after-hours trading even as it reported better-than-expected earnings.

The world's largest video-subscription service returned to profitability in the second quarter and posted a profit of $6 million, or 11 cents a share, on revenue of $889 million. Analysts polled by Bloomberg had called for earnings per share of just 5 cents. During the same period a year ago, Netflix earned $1.26 a share, on sales of $788.6 million.

Revenue rose 13 percent to $889 million, roughly in line with estimates.

The company said it added 1.1 million net subscribers to its video-streaming service, giving it 27.6 million subscribers worldwide.

Netflix spooked investors when it suggested the company might not reach its goal of adding 7 million U.S. subscribers this year. For its third quarter, Netflix said it expects to lose as much as 10 cents a share, or earn as much as 14 cents a share.

Moreover, this quarter the Olympics are likely to have a negative impact on Netflix viewing and sign-ups. So, our Q3 guidance is 1 million to 1.8 million domestic net adds, Netflix Chief Executive Reed Hastings said in a statement. If we finish Q3 in the high end of that range, we would remain on track for 7 million domestic net additions for the year; otherwise it would be challenging to achieve that goal by year-end.