Ask Matt: Is it curtains for Netflix stock?

Q: Is it curtains for Netflix stock?

A: Netflix (NFLX) has been one of the celebrity stocks every investor wanted to be around. But the latest quarterly results turned into a rare bomb, which reminds investors this is a speculative play.

On the surface, things investors typically look for in quarterly performance came in fine during the June quarter. The video-streaming company late Monday reported adjusted quarterly profit of 9 cents a share, which was not only 50% higher than year-ago levels, but beat expectations by 350%, says S&P Global Market Intelligence.

The problem is that the company isn’t adding new subscribers as rapidly as investors would like. During the quarter, the company added 1.7 million subscribers, down from the 2.5 million many expected. Consumers are starting to be more price sensitive about the service and competing streaming networks are taking some share. When you have a stock trading for more than 300 times its trailing earnings over the past 12 months, any bad news is difficult to overcome. Investors sent the stock down roughly 15% Tuesday to around $85 a share. Shares are down about 25% this year. Analysts, though, seem to think the sell-off is temporary, and on average think the shares will be 25% higher in 18 months.

Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.