Netflix spikes after earnings and subscribers blow past estimates (NFLX)

Brenda Watkins
October 17, 2018

Netflix's results sent shares of Alphabet Inc, Facebook Inc and Amazon.com Inc up about 1 percent higher in extended trade. Only about 1 million of the almost 7 million new subscribers came from the United States. The company, founded in 1997 as a DVD-by-mail service, posted its strongest years of subscriber growth in 2016 and again in 2017 - in its 20th and 21st years of operation.

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"After handily blowing away Street expectations on subs in the last few years, this is a clear speed bump for Netflix as the global miss was most concerning, given this is the linchpin to the core growth thesis for the coming years", GBH Insights technology analyst Daniel Ives said at the time, suggesting a "speed bump" rather than the start of a negative trend.

Of course, the quarter also attracted its share of controversy, including the debut of Insatiable, which earned accusations of fat-shaming. The stock rose as much as 17 per cent in after-hours trading to US$405, and the market value of the company once again challenged media giants such as Comcast Corp., the largest U.S. cable provider, and Walt Disney Co, the world's largest entertainment company.

The company said it expects to add 9.4 million net subscribers globally in its fourth and final quarter of the fiscal year. Said eMarketer media analyst Paul Verna. "The debt market is open to Netflix, but rising rates make it costlier to finance the company's multibillion-dollar programming investments".

The streaming superpower, which hit its $4bn (£3.03bn) revenue estimate, was under pressure to up subscriber growth after falling short of expectations in the previous quarter.

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Netflix reported 1.09 million domestic subscriber additions, surpassing estimates of 673,800.

The firm's shares are have risen than 65% so far this year.

In typical Netflix form, the company didn't provide detailed statistics about how many people watched individual titles, nor did it give hard numbers for the size of the audience for To All the Boys. "Even the USA number was better than I thought it would be".

The Los Gatos, California-based company said revenue jumped 34 percent to $4 billion, matching estimates of Wall Street analysts polled by Refinitiv. While the company reports a net profit, it spends more than it takes in and borrows frequently to finance its programming budget.

Analysts keep setting the ceiling and Netflix keeps crashing through it.

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