Netflix shares recover after third quarter subscriber growth tops expectations

Daniel Fowler
October 18, 2019

Netflix announced its highest price hike ever in January, raising the price of its most popular subscription package to $12.99 from $10.99.

Despite positioning Netflix as the market leader, Hastings said that "we believe we're less than 10% of TV screen time in the United States (our most mature market) and much less than that in mobile screen time".

Netflix reported a net income of US$665 million in the recently ended quarter, up from US$403 million in the same period a year ago and topping most analyst forecasts.

The good news about the latest adventure for our favorite characters in Hawkins, Indiana, the small midwestern town perpetually besieged by interdimensional demons, probably comes as no surprise to anyone who has spent any amount of time on the internet combing through Scoops Ahoy andNeverending Storymemes since Season 3 debuted over the July 4th weekend. In the third quarter, the season three of La Casa de Papel (or Money Heist) is themost watched show on Netflix across its non-English language territories with 44 million households watching the new season in the first four weeks of release. Similarly, in India, we debuted the second season of "Sacred Games', our most watched show in India", the company said. "We also plan to expand our investment in local language original films and unscripted series", it added. Also, we think the move to only focus on global operating margin will obscure the slower pace of expansion for the worldwide operating margin, a key tenet for some Netflix bulls.

"In Q3, we grew to $5.2 billion in revenue, up 31% over the prior year, and operating income doubled to $1.0 billion".

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Netflix now has 158.3 million global streaming paid memberships, and expects that to grow to 165.9 million by the end of 2019.

"We're making strides in our key markets and, while we have much more work to do in Asia in the coming years, we are seeing encouraging signs of progress", said the company.

In its note to shareholders this week, Netflix said: "Many are focused on the streaming wars, but we've been competing with streamers as well as linear TV for over a decade".

Netflix Inc NFLX.O added slightly more paying subscribers than Wall Street expected in the third quarter, a relief to investors who had anxious the company might fall short just as Disney and Apple prepare to ramp up the streaming video wars. Subscriber figures are hard to interpret due to bundles, discounts and other promotions, it explained.

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