Netflix Disappoints the True Believers

Netflix Inc. is one of those companies that functions like a religion: Either you believe, or you don’t. (See also: Tesla and Amazon.) That’s how it goes for a company that is valued at 167 times its earnings over the past year.

The tricky thing is if there are cracks in the belief system, the whole religion is tested. That is what happened to Netflix on Monday when it reported adding about 670,000 net new U.S. streaming subscribers in the second quarter — about half as many as the company had forecast. Including disappointing customer growth outside the U.S., the company’s 5.15 million net streaming sign-ups fell short of Netflix’s own forecast from April by more than a million subscribers. Its third-quarter subscriber forecasts were also below the average expectations of stock analysts.