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

Angelo Anderson
October 17, 2018

Netflix's Cinderella story isn't over just yet.

Netflix shares surged more than 10 percent in after-hours trading Tuesday after the streaming giant easily topped expectations for quarterly earnings and subscriber growth. The company anticipates adding another 9.4 million subscribers during the fourth quarter, up 13% compared with the 8.3 million it added a year ago. Netflix said it signed up roughly 1.1 million subscribers in the United States, above analysts' estimate of 674,000, according to Refinitiv. Worldwide markets accounted for 84 per cent of new customers, the company said, and constituted 57 per cent of its overall customer base.

"The question at the end of Q2 was whether that miss was an aberration or signs of a longer-term slowdown in the business", said Forrester Research analyst Jim Nail. "That's a really good number for a market that's this mature".

Analysts estimate that it added about 676 hours of original programming in the USA in the most recent quarter, 135% more than in the same period a year earlier. In the third quarter, it released its largest slate of original TV shows and movies to date, including new seasons of hits such as "Orange is the New Black" and "BoJack Horseman".

Total revenue rose to $4 billion, in line with analysts' expectations, from $2.98 billion a year earlier.

Netflix added almost seven million new customers in the three months to September, bringing its total to more than 137 million members worldwide.

Netflix is not looking to diversify to other areas for now, and is unlikely to feel compelled to for years to come, Reed told the post-earnings interview.

Subscriber growth is key to keeping up with the investments. The company has parlayed that into huge gains for investors.

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

Netflix is investing billions of dollars in entertainment programming to hook new customers around the world.

The company reported third-quarter profits of $403m, compared with $129.6m a year earlier. It has issued a net $7.5 billion of bonds in less than three years, though that could carry a cost in a changing economic environment.

Rivals have long groused that Netflix can spend ungodly sums without ever having to make money itself.

In a letter to shareholders, Netflix said it saw "strong growth broadly across all our markets including Asia". While most of that still funds shows licensed from other companies, original programs account for a growing share. So we're open to those possibilities, but there's so much growth ahead that's possible in streaming video, entertainment.

Netflix is planning a new film and television production hub in New Mexico; new research finds that one-third of "gluten-free" foods sold in US restaurants actually contains trace levels of the substance.

Other reports by Iphone Fresh

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