Netflix shares sink after earnings report

Netflix shares sink after earnings report

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Netflix reported earnings after the bell. Here are the results.

  • Earnings per share: $2.88 vs $2.86 expected
  • Revenue: $8.16 billion vs $8.18 billion expected

On Tuesday, Netflix said goodbye to what got it started — it’s DVD mailing business, in which it would send out the discs in red envelopes to customers. The company’s Co-CEO Ted Sarandos said in a blog post that it would finally wind down the DVD business, which “continues to shrink.”

A year ago, Netflix had reported its first subscriber loss in a decade, sending its shares on a downward spiral, as well as those of its media peers. The results pushed Netflix and its streaming rivals to focus on profits over subscriber numbers.

Results for the country’s new ad-supported tier will be top of mind. Last November, Netflix unveiled its cheaper tier with commercials, which costs $6.99 a month. The ad-supported tier came shortly after it lost subscribers as streaming competition ramped up.

Sarandos recently said the company is likely to offer multiple ad-supported tiers in the future.

Another focus for Wall Street will be Netflix’s crackdown on password sharing. Late last year, the company said it would begin rolling out measures to have people who have been borrowing other accounts create their own.

The company has said more than 100 million households share accounts, or about 43% of its global user base. That has affected its ability to invest in new content, Netflix has said. Both the ad-supported option and crackdown on password sharing are meant to boost profits.

In February, Netflix outlined password-sharing guidance in four countries: New Zealand, Canada, Portugal and Spain. The company said it would ask users in those countries to set a “primary location” for their accounts, and allow users to establish up to two “sub accounts” for those who don’t live in their home base for extra fees.

The company has yet to provide password-sharing guidance for the U.S., although it is expected to do so this year.

(With Inputs from cnbc)

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