Netflix Stock Tumble, Taps Ted Sarandos as Co-CEO

LOS ANGELES, KOMPAS.com – Content Chief Ted Sarandos was tapped as co-CEO as a weaker-than-expected forecast in subscriber growth sent Netflix stocks tumbling.

Sarandos is a 20-year veteran at Netflix and is poised to be a successor to co-Founder of the streaming video service provider, Reed Hastings.

Netflix forecasts a further drop in subscriber growth during the coronavirus pandemic which is a stark comparison to Wall Street’s expectations for the third quarter.

This sent the company’s shares tumbling 9.5 percent in after-hours trading. Sarandos will maintain his role in leading Netflix’s content operations.

Reed Hastings said he has no plans of leaving the company soon and that he and Ted Sarandos would work full-time as co-CEOs.

"To be totally clear, I'm in for a decade," he said in a post-earnings interview with an analyst.

Netflix’s Chief Product Officer Greg Peters was given the additional role of Chief Operating Officer on Friday.

For July through September, Netflix forecasts it would add 2.5 million new paid streaming customers around the world.

Analysts on average expected a projection of 5.3 million, according to IBES data from Refinitiv. (https://bit.ly/2DQW1n9)

"Investors are disappointed by the weak future guidance and see the initial boost from the pandemic coming to an end," said Haris Anwar, Investing.com senior analyst.

For the June quarter, the company reported diluted earnings per share of $1.59, below analyst forecasts of $1.81. Revenue climbed 25% to $6.1 billion.

Netflix added 10.1 million streaming subscribers from April through June, its highest second-quarter gains ever, as the novel coronavirus forced people around the world to shelter at home.

Those restrictions led to "huge growth in the first half of the year," Netflix said in a letter to shareholders, but "as a result, we expect less growth for the second half of 2020 compared to the prior year."

Shares of Netflix, which ranked among the biggest gainers of the pandemic, plunged 9.5% to $477.15 in after-hours trading.

With the new members, the world's dominant streaming service reached nearly 193 million paying online customers.

Netflix is trying to win new customers and outrun the competition as viewers embrace online viewing.

The pandemic sparked new interest in the service as people around the world were told to stay home, movie theaters went dark and sports leagues canceled live games.

The second-quarter gains were expected, Fitch Ratings director Patrice Cucinello said, but she questioned if the benefits would last.

"Do they have to give back some of these subscribers once people aren’t locked in their homes?" she asked.

New releases during the quarter included "Space Force," "Too Hot to Handle," a Jerry Seinfeld comedy special and new seasons of "Money Heist" and "Dead to Me."

Netflix's membership rolls rose even as it faced more streaming competition than ever.

Walt Disney Co's Disney+ came online in November, and AT&T Inc debuted HBO Max in May, among other newcomers.

The new programming schedule for Netflix remained "largely intact" for 2020, the company said, despite a widespread halt to production of new film and TV shows amid the COVID-19 outbreak.

In 2021, the disruption likely will lead to more of Netflix's major titles being released in the second half of the year, the company said.

The total number of original film and TV shows in 2021 should exceed 2020, it added. 

(Writer: Lisa Richwine, Neha Malara | Editor: Arun Koyyur, Lisa Shumaker) 

Source: https://www.reuters.com/article/us-netflix-results/netflix-names-ted-sarandos-co-ceo-forecasts-weaker-growth-idUSKCN24H35E