Netflix's report shows strong performance in the second quarter, with key indicators exceeding analysts' expectations. However, the stock of this streaming giant fell in after hours trading, mainly due to a more conservative revenue outlook for the third quarter.

At 20:39 Greenwich Mean Time, Netflix's stock price was $631.01, a decrease of 1.87%.

In the second quarter, Netflix's earnings per share were $4.88, exceeding expectations of $4.74. Revenue reached $9.56 billion, a year-on-year increase of 16.8%, slightly higher than the expected $9.53 billion. The company's performance is attributed to the average growth of paid members and the success of the advertising support layer.

This leading streaming company added 8.05 million paying subscribers in the second quarter, far exceeding analysts' expectations of 4.7 million. This brings the total number of Netflix's global paid members to 278 million, an increase of 16.5% compared to the same period last year. The company's password sharing crackdown and the expansion of its advertising support layer have contributed to this growth.

According to a Netflix report, advertising support for members increased by 34% month on month. The company plans to achieve a critical advertising subscriber scale in advertising countries by 2025, laying the foundation for further growth in 2026 and beyond. In order to promote the advertising layer, Netflix plans to gradually phase out its basic program membership in the United States and France.

Despite strong performance in the second quarter, Netflix's revenue forecast for the third quarter is $9.73 billion, lower than analysts' expectations of $9.83 billion. This outlook, coupled with the company's decision to cease disclosing the number of subscribers and average revenue per member starting next year, has raised concerns about the long-term sustainability of growth.

After Netflix released its performance, its stock price fell by up to 6% in after hours trading. However, the company has raised its full year revenue growth forecast for 2024 to 14% to 15%, higher than the previous range of 13% to 15%. The annual operating profit margin is expected to reach 26%, higher than the previous forecast of 25%.

The market's response to Netflix's performance report shows a short-term bearish attitude.

Despite the strong performance of the company in the second quarter, concerns about future revenue growth and the decision to conceal key indicators have caused uncertainty. Traders should closely monitor Netflix's ability to maintain membership growth and successfully monetize its advertising support layer in the coming quarters. During the digestion of these mixed signals in the market, stocks may face short-term downward pressure.