Netflix (NFLX) stock is taking a hit following the company’s latest earnings report, which was released on Wednesday. The report revealed that subscriber growth is slowing in the U.S.
It was only a matter of time before domestic growth slowed as seemingly everyone and their mother already subscribes to Netflix and competition in online streaming services continues to grow with rivals like Amazon and Hulu upping their respective games and others like HBO and Showtime offering standalone services that don’t require cable subscriptions.
Netflix also has also been losing some major movie titles, which could turn some subscribers off. The company recently let a deal with Epix expire as Hulu swooped in with a mult-year agreement. The deal includes numerous popular movie titles of the blockbuster variety.
On top of that, the company recently announced a price increase for new subscribers. It’s only a dollar difference, but an increase nonetheless.
While these are all things that could conceivably affect Netflix’s growth, it’s actually the roll-out of chip cards (EMV) that Netflix says is really responsible. According to the company, there were just a lot of people who didn’t get their credit card info updated in time to continue service, so it was discontinued, leading to the company dropping a bunch of subscribers (many of which are likely only temporarily unsubscribed).
By that measure, it will be interesting if Netflix sees a significant growth uptick on the next report as people rectify that situation.
Here’s the full Netflix Q3 2015 Earnings Interview:
Most analysts don’t seem to be to worried for the company. For example (via Yahoo Finance):
Youssef Squali of Cantor Fitzgerald commented in a note that Netflix’s third-quarter print was “solid” and the “underlying strength of the model” remains “intact” with the company on pace to end the year with over 74 million subscribers worldwide.
Squali added that the “slight increase” in U.S. churn is “likely temporary” and a “hiccup.” The analyst pointed out that the company still expects total 2015 net adds to be around six million despite its penetration rate running at 40 percent already.
Here’s a look at Netflix’s actual numbers:
Earlier this week, Netflix released its latest ISP Speed Rankings, which saw Verizon FiOS reclaim its top spot in the U.S. over Cox.
Image via Netflix Investor Relations