Streaming video service Netflix (NFLX) - Get Report, which last quarter spooked investors by cutting its forecasts for subscriber growth, said Monday it added fewer subscribers, sending its stock down by 13.1% in after-hours trading.
The company, known for its original shows including House of Cards and Orange is the New Black, said it added 1.7 million new subscribers in its second quarter, below its forecast 2.5 million new customers and the 3.3 million it added in the same quarter a year earlier.
"We are growing but not as fast as we would have liked or have been," the company said in a letter to its shareholders. "Disrupting a big market can be bumpy, but the opportunity ahead is as big as ever, and we continue to improve every aspect of our business."
On a conference call Monday, Netflix CFO David Wells said the company expected some of the weakness in new subscriber numbers to continue until potentially the end of November.
Netflix earned 9 cents a share on $2.1 billion in revenue. Wall Street consensus had been for earnings of 2 cents a share and $2.11 billion in revenue.
In aftermarket trading, its stock fell to $85.85 a share, off by $12.96.
The company said it would have made its overall target for new customers but experienced "expectedly" higher churn -- or customers who dropped the service -- as a result of its decision earlier this year to hike its monthly subscription price in the U.S. to $9.99 for its most popular package from its long-time price of $7.99.
"We think some members perceived the news as an impending new price increase rather than the completion of two years of grandfathering" -- or rolling in the new price gradually for its older customers -- the company also said in its shareholder letter.
In the U.S, where the price hike occurred, the company said it added only 160,000 new customers, compared with its forecast of 500,000 additional subscribers. In its foreign markets, where the company provides streaming services in more than 188 countries, Netflix said it added 1.5 million subscribers, down from its forecast of 2 million new customers.
Netflix now forecasts it will add 300,000 new subscribers in the U.S. in the third quarter, compared with 880,000 in the same quarter a year ago. Similarly, it projects 2 million new customers internationally, down from 2.74 million in 2015's third quarter.
Wall Street largely rates Netflix on its subscriber growth as investors bet on the company as a leading indicator of how consumers' TV viewing habits are being redefined through the introduction of streaming services that also include Amazon's (AMZN) - Get ReportPrime viewing subscription offering.
Netflix executives brushed off the notion that competition from other streaming services, including CBS's (CBS) - Get Report All Access service and the media company-backed Hulu service, was responsible for its slower than anticipated growth.
"Our view is that we all growing primarily against linear TV hours and that competition did not contribute materially to our miss in Q2," the company said. "Similarly, we don't believe that market saturation is a key factor in the U.S. given we experienced similar performance over a similar period in multiple countries with differing levels of Netflix market penetration."
The company also said its profit margins narrowed in the second quarter, in which it released new seasons of seven shows and launched the sitcom The Ranch starring Ashton Kutcher. Netflix, which expects to spend $5 billion this year on content, said its operating margin declined to 3.3 % from 4.6% in the same quarter a year earlier.
Netflix stock had closed at $98.81 a share this afternoon, up 0.4%, after CBS said it had licensed to it the international streaming rights to its new Star Trek television series. The company also will be the exclusive home to its premiere in January for 188 countries, excluding the U.S. and Canada.
This article is commentary by an independent contributor. At the time of publication, the author held a positions in CBS.