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Netflix shares rise after earnings report

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(L-R) Reed Hastings and Ted Sarandos attend the “Marseille” Netflix TV Serie World Premiere At Palais Du Pharo In Marseille, on May 4, 2016 in Marseille, France.

Stephane Cardinale | Corbis | Getty Images

Adequate.

Netflix didn’t blow the roof off its second-quarter earnings. It announced it lost about 1 million global subscribers within the quarter, marking the second consecutive quarter it has hemorrhaged customers. And it lost 1.3 million subscribers within the U.S. and Canada, marking the third time within the last five quarters it has lost paid users in its most lucrative region based on average revenue per user.

For the third quarter, Netflix forecast it can add just 1 million latest subscribers — below the 1.8 million average analyst estimate, in accordance with StreetAccount. If Netflix follows through and adds 1 million customers next quarter, it can still have lost subscribers this 12 months through nine months. Compare that to analyst estimates from earlier this 12 months of nearly 20 million net adds.

Still, Netflix shares soared greater than 6% in after hours trading. The corporate had predicted it might lose 2 million subscribers within the quarter. A decline of 1 million is healthier than that.

Perhaps investors’ positive sentiment toward the corporate is being driven by the corporate’s concrete plans to reinvigorate growth — most of which won’t kick in until 2023.

Netflix announced its advertising-supported product will launch within the early a part of 2023. That is actually a delay from late 2022, when Netflix had hoped to debut the cheaper tier, in accordance with a Recent York Times report from May.

In its quarterly shareholder letter, Netflix also outlined its plans to crack down on password sharing, noting it has launched two different approaches in Latin America to “find an easy-to-use paid sharing offering that we consider works for our members and our business that we will roll out in 2023.”

Netflix added, “We’re encouraged by our early learnings and talent to convert consumers to paid sharing in Latin America.”

The corporate closed its shareholder letter with a little bit of a pep talk. Investors appear to be listening to go coaches Reed Hastings and Ted Sarandos.

“Reaccelerating our revenue growth is an enormous challenge,” the corporate wrote. “But we have been through hard times before. We have built this company to be flexible and adaptable and this shall be an amazing test for us and our high performance culture. We’re fortunate to be able of strength because the leader in streaming entertainment by all metrics (revenue, engagement, subscribers, profit and free money flow). We’re confident and optimistic concerning the future.”

WATCH: CNBC full discussion of Netflix earnings

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