Netflix’s sluggish subscriber growth marks ‘one of the pivotal moments’ in the company’s story, says analyst Gene Munster

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“Stranger Things.”
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Netflix

Netflix posted its second-quarter earnings on Wednesday, reporting that subscriber growth had missed expectations – a revelation that sent stock plunging by more than 10% in after-hours trading. According to Gene Munster, managing partner at Loup Ventures, the miss could be a “pivotal” moment for the streaming giant, he said when appearing on CNBC’s “Fast Money.”

The company added 2.7 million subscribers in the second quarter, falling below expectations of 5 million. It also lost 126,000 paid subscribers in the United States, signaling the firm’s first drop in domestic subscribers in 12 years, as The New York Times notes.

“This is negative, and I think we’re going to look back at this quarter as one of the pivotal moments in the Netflix story,” Munster said on CNBC.

The lower-than-expected results come as rivals such as Disney, Apple, and HBO are on the verge of launching new streaming services. Netflix is also losing fan-favorite sitcoms “Friends” and “The Office” to rivals HBO and NBCUniversal, both of which have plans to launch new streaming media services. The company also raised its subscription prices earlier this year. Netflix, however, said in its letter to shareholders that it didn’t view competition as being a factor in its lackluster subscriber results.

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Netflix's 2019 movie

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Netflix’s 2019 movie “Murder Mystery” stars Jennifer Aniston and Adam Sandler.
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Netflix

Munster blamed the slump on the streaming giant’s original content when speaking with CNBC. New shows Netflix released in the second quarter included the series “Dead to Me,” which stars Christina Applegate and Linda Cardellini, and a movie called “Murder Mystery” starring Adam Sandler. “Dead to Me,” which earned Applegate an Emmy nomination, was viewed by 30 million people worldwide in its first month, the company said according to The Hollywood Reporter.

“The key insight here is that the content lineup that they had in the June quarter just simply didn’t get the job done,” Munster said to CNBC. “We can talk about what’s coming in terms of competition, but ultimately that is the tip of the spear of this story.”

But Netflix’s guidance for the coming quarter suggests that it expects subscriber growth to rebound in the coming months. The company says it expects to see an additional 7 million paid net subscribers in the third quarter.

Watch the clip on CNBC below.