Netflix's third quarter earnings report, which hit the wire just after trading ceased on Wednesday, sent the company's stock into an after-hours tailspin despite solid numbers across the board.
For the period ending September 30, the streaming video service reported $1.74 billion in revenue with a net income of 29.4 million, or $0.07 per share. That's a hair under the $1.75 billion and $0.08 per share analysts were expecting but it's the subscriber numbers that concerned investors the most.
Netflix added 3.62 million new subscribers over the past three months, bringing its total subscriber count to 69.17 million. Internationally, Netflix picked up 2.74 million newcomers but just 880,000 domestic subscribers - far less than its own forecast of 1.15 million subscribers.
In a quarterly letter to shareholders, CEO Reed Hastings and CFO David Wells said the company experienced a slightly higher than expected involuntary churn rate which it attributed to the ongoing transition to chip-based credit and debit cards in the US. Or in other words, some subscribers experienced difficulties renewing their membership with new cards. As The Wall Street Journal points out, this seems odd considering new cards usually have the same account numbers as the plastic they're replacing.
Netflix's share value dropped by more than 14 percent in after-hours trading although it quickly rebounded and has settled to within $4 of its closing value.