Netflix Inc has elevated its content manager, Ted Sarandos, to the position of co-CEO making the 20 year veteran a clear successor to co-founder Reed Hastings.
The development comes in the wake of Netflix’s forecast that the growth rate of subscription is likely to slow down during the third quarter, sending its shares tumbling by 9.5% in after-hours trading.
Sarandos will continue to manage the Netflix’s content operations.
In a statement Hastings said, both would work full time as co-CEOs and that he had no plans to leave the company soon.
“To be totally clear, I’m in for a decade,” said Sarandos during a post-earnings interview with an analyst.
The development also sees Greg Peters being named as Netflix’s Chief Product Officer in addition to the role of chief operating officer.
For July through September, Netflix has forecast it would add 2.5 million new paid streaming customers around the world, against an average analysts’ projection of 5.3 million, according to IBES data from Refinitiv.
“Investors are disappointed by the weak future guidance and see the initial boost from the pandemic coming to an end,” said Haris Anwar, a senior analyst at Investing.com.
For the quarter ending June 30, Netflix reported a diluted earnings per share of $1.59, below analyst forecasts of $1.81.
Netlfix’s revenues however have shot up by 25% to $6.1 billion.
From April through June, Netflix added 10.1 million streaming subscribers, its highest ever second-quarter gains. The coronavirus-induced lockdowns around the world also led to “huge growth in the first half of the year,” said Netflix in a letter to shareholders, but “as a result we expect less growth for the second half of 2020 compared to the prior year.”
According to Patrice Cucinello, ratings director at Fitch, Netflix’s second-quarter gains were expected, the question however remains whether the benefits would last.
“Do they have to give back some of these subscribers once people aren’t locked in their homes?” asked Cucinello.
The rise in membership comes at a time when Netflix is facing increased competition from the likes of Walt Disney Co’s Disney+, and AT&T Inc’s HBO Max in, among others newcomers.
Netflix’s new programming schedule continues to remain “largely intact” for 2020, said the company, despite a widespread halt to production of new film and TV shows midst the COVID-19 pandemic.