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The Ratings Game: Netflix stock slammed by subscriber miss, but analysts are unfazed

Netflix Inc.’s weaker-than-expected second-quarter subscriber numbers sent its stock sharply lower in premarket trade Thursday, but analysts were unfazed by the miss and said they’re sticking with their full-year forecasts.

“Did the world change in the last three months?” Morgan Stanley analysts asked in a note. “We do not believe it did. Moreover, layering in the second-half guide leaves our full-year estimates largely unchanged. If it delivers, 2019 will be another year of record net adds and nearly double-digit ARPU (average revenue per user) growth.”

Analysts led by Benjamin Swinburne laid out their case, noting that Netflix NFLX, -10.97% has missed quarterly net additions once a year in each of the last three years, only to outperform “meaningfully” in the quarter after the miss.

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