Shares of Netflix Inc. notched a higher turn on Wednesday’s pre-market trading after its second-quarter earnings report soothed lingering growth concerns.
The American streaming giant accelerated by 7.85% or 15.83 points to $217.46 per share. This upturn followed Tuesday’s gain of 5.61% to $201.63 apiece.
Netflix stocks ticked up after the company reported fewer subscriber losses than anticipated in the three-month period ending in June. The streamer only dropped 970,000 users in the quarter, lower than the previous outlook of a 2.00 million drop.
At the same time, the entertainment firm announced plans to unveil its lower-cost, ad-supported tier in early 2023. This news comes on the heels of Netflix tapping Microsoft to be its partner on the future offering. The tech company opted to develop the lower-cost offering after years of resistance against the idea of running ads.
Moreover, the California-based business reported earnings of $3.20 per share, notably higher than the analysts’ consensus of $2.94. However, its revenue slightly declined to $7.94 billion, missing the expected $8.04 billion.
Netflix currently has 220.67 million subscribers and expects to add another 1.00 million in the third quarter. This estimate would reverse some losses seen during the first half of the year. Nevertheless, analysts had predicted the firm would guide for growth of around 1.80 million.
Netflix tests $2.99 charge for shared accounts
Furthermore, Netflix unveiled the early stages of its paid sharing plan. This effort would upcharge some members for sharing their subscription plan with people outside their house. The move came as the firm looked for new ways to make money after years of massive growth.
It would start charging five countries in Central and South America with an extra $2.99 per month. Then, it eyes two different approaches in test cases in Latin America that can inform a broader rollout next year.
Meanwhile, Netflix’s ad-supported subscription will be in addition to the three available options. It would be the cheapest being $10.00 per month in the United States.
