By Lisa Richwine and Neha Malara
(Reuters) – Netflix Inc <NFLX.O> on Thursday elevated its content chief Ted Sarandos to co-CEO, making the 20-year veteran of the pioneering streaming video service a clear successor to founder Reed Hastings.
The promotion came as one of the world’s largest subscription streaming service forecast its subscriber growth during the coronavirus pandemic would slow even more than Wall Street expected during the third quarter, sending its shares tumbling more than 10% in after-hours trading.
Sarandos will continue his role leading the content operations. In a blog post https://bit.ly/30gU8rs Hastings said he had no plans to depart anytime soon. “It’s why I am so excited about being at Netflix for the decade ahead,” Hastings wrote.
For July through August, Netflix forecast it would add 2.5 million new paid streaming customers around the world. Analysts on averaged 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,” Haris Anwar, Investing.com senior analyst, said.
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 as the 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 10% to $472.89 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 start of 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.
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 <DIS.N> Disney+ came online in November, and AT&T Inc <T.N> debuted HBO Max in May, among other newcomers.
For a graphic on Netflix total subscription growth:
(Reporting by Neha Malara and Lisa Richwine in Los Angeles; Editing by Arun Koyyur and Lisa Shumaker)