Netflix on Wednesday attributed its weaker-than-expected earnings results, in part, to complications related to the country's transition to chip-based credit cards. The video-streaming provider said it saw involuntary service cancellations in the U.S. tied to its inability to collect reoccurring payments from members whose credit and debit cards were shifted to chip-based technology.
Netflix shares fell hard after the announcement as investors tried to make sense of the results. Meanwhile, some analysts found the explanation hard to believe, while others wondered if the company could be sounding the alarm on a difficult new trend for any subscriber-based business.
The company's explanation deserves some serious thought, said Steven Weinstein, senior technology, media and telecom analyst at ITG Investment Research, who said he trusts Netflix management.
On the other hand, other Wall Street analysts, such as Wedbush Securities' Michael Pachter, who called the excuse "the dumbest thing I've heard," said they were unconvinced.
"I think it's probably a factor, but how much weight to put on it is what I'm wrestling with right now," Weinstein said in an interview with CNBC on Thursday. "We're still trying to make sense of it — does this mean there's a new trend for subscribers, or is this just kind of noise in the data."