Netflix blames new chip and pin cards for weak results
Video-streaming service provider Netflix reported third-quarter US subscriber additions below its own forecast, blaming a transition to chip-based cards for the miss.
Shares of Netflix, known for its original shows such as 'House of Cards', plunged about 15pc after the bell on Wednesday, before clawing back to trade down 2.4pc. US credit and debit card companies have been shifting to chip-enabled cards ahead of the October 1 deadline mandated for the switch.
For Netflix, the switch meant that many of the older cards on its file no longer worked as the companies gave new cards to their customers, leading to "involuntary churn", chief executive Reed Hastings said.
"It's just the dumbest thing I've heard," Wedbush Securities analyst Michael Pachter said.
FBR Capital Markets analyst Barton Crockett said the issue around the chip cards is particularly confusing, given that these cards have been around for a bit. "It begs a million questions," he said.
Netflix added 880,000 US subscribers in the third quarter, compared with its forecast of 1.15 million. (Reuters)