Netflix Falls on Disappointing Guidance

Netflix NFLX is trading lower on the session following its Q2 earnings announcement yesterday. The company reported an EPS of $0.11 vs $0.05 estimates and revenues or $889 million vs $888.90 million estimates. Netflix also announced a Q3 EPS guidance of $(0.10)-0.14) vs $0.11 estimates. Netflix stated," Our domestic streaming contribution margin improved 200+ basis points sequentially for the second consecutive quarter to 15.6% (up from 13.2% in Q1 and 10.9% in Q4), surpassing the year end contribution margin target we outlined back in Q4 2011. The Q2 margin expansion was predominantly driven by the planned sequential decline in marketing expense, while content expenses grew in line with revenue (as compared to Q1). For Q3, our guidance implies a further 100 bps expansion in contribution margin." Netflix is currently trading at $62.55, a loss of $17.84 or 22.19%.