NEW YORK (CNNMoney) — Netflix shares plunged 25% Wednesday, a day after the company reported better-than-expected earnings but issued a weak outlook for the rest of the year.
Netflix said it may be “challenging” for it to meet its goal of adding 7 million new streaming subscribers in the United States this year if subscribers don’t come in strong in the third quarter. In the first half of the year, Netflix added roughly 2.3 million new domestic streaming subscribers, and now has nearly 24 million in total.
In a letter to investors outlining the results, Netflix CEO Reed Hastings suggested that the Olympics could have a negative impact on viewing and sign-ups.
Netflix () reported $889 million in revenue for the second quarter, in line with analyst expectations, and earnings of 11 cents a share, ahead of analyst projections for five cents. Net income was $6 million.
In the third quarter, Netflix said it expects to post results anywhere between a loss of 10 cents a share and earnings of 14 cents a share. For the fourth quarter, the company said it will return to the red as it launches in a new market — as yet unnamed — in Europe.
Netflix’s stock has been volatile this year, pushing close to $130 in February before dipping to around $62 in June. Shares jumped more than 10% earlier this month after Hastings revealed that subscribers watched more than 1 billion hours of video in June.
The stock tumbled 13% in after-hours trading Tuesday, and continued selling off sharply into Wednesday’s trading session. Shares were down 22% at $62.52 mid-morning.
A key concern for Netflix is how much it will have to shell out to retain its catalog of TV and film titles.