Shares of Netflix surged after the closing bell Tuesday despite the streaming giant’s disclosure in its second-quarter earnings report that it lost subscribers for a second quarter in a row, as the total was lower than investors had feared—with the company optimistic about adding back subscribers later in the year.
Netflix’s stock jumped nearly 7% to around $215 per share in after-hours trading, with investors cheering the better-than-expected second-quarter earnings report.
The streaming giant reported that it lost 970,000 subscribers in the latest quarter—significantly less than the company’s previous forecast of losing 2 million subscribers—and management remains optimistic about adding back customers later in the year.
Analyst estimates for Netflix’s second-quarter subscriber loss had ranged from as much as 4 million subscribers to as little as 1.5 million, with some analysts citing the strong performance of season four of StrangerThingswhich was Netflix’s most watched English-language show yet.
Investors were hoping for an improvement after a dismal first quarter, when Netflix reported its first subscriber loss in more than a decade (losing 200,000 customers) and shares plunged 35% in one day.
Netflix reported mixed financial results for the second quarter: Earnings came in above Wall Street expectations, though revenue was weaker-than-expected at $7.97 billion versus a consensus analyst forecast of $8.04 billion, according to Refinitiv.
In order to offset recent slowdowns, Netflix is looking to introduce a cheaper ad-supported subscription plan, announcing last week that it will be partnering with Microsoft in order to do so—but Netflix COO Greg Peters said that the project is still in “very early days.”