Netflix, Inc. (NASDAQ:NFLX): Netflix, Inc. (NFLX) Smashes Earnings Expectations

Lloyd Doyle
October 19, 2018

Netflix will face stiff competition, with Walt Disney, the world's largest entertainment company, looking to launch its own on-demand services next year, as is AT&T, the parent of Warner Bros and HBO.

The leap in subscribers marked a sharp turnaround from three months ago when investors sent Netflix shares tumbling 14% after it missed Wall Street's subscriber growth targets. "The latter has not developed at a pace that exceeds our expectations, which suggests upside is more limited". $33.13 million worth of Netflix, Inc. Even before the surge that started with Tuesday's after-hours trading, the shares were up 80 percent this year.

The streaming Company also reported third-quarter profits of $US403 million, or 89 cents a share, compared with $US129.6 million, or 29 cents a share, a year earlier. Netflix had a negative cash flow of $859 million in the third quarter, almost doubling from a negative cash flow of $465 million past year. What's remarkable from their earnings is that the DVD business is still operating although as a smaller share of revenue with each quarter that passes.

"Given the decreasing efficiency of content and marketing spending, we are decreasing our global contribution profit estimates", he wrote.

As Wedbush has the most negative stance on Netflix of all listed analysts, we wanted to look at its rationale for remaining so negative, despite raising its price target over time.

The company posted its Q3 earnings with a letter to its investors, reassuring them of the growth of the company, and its future. Netflix added 1.09 million subscribers in the US, and 5.87 million internationally, bringing the total number of subscribers to 137 million.


The streaming service added 6.96 million subscribers - beating analyst predictions of 5.1 million - and took in $4 billion in revenue in the third quarter, matching those analysts' projections.

Netflix now has about 137 million subscribers around the globe, including Asia.

This quarter, the company expects to sign up 9.4 million new subscribers globally, far above the 7.18 million average of forecasts compiled by Bloomberg.

Netflix has upended the economics of pay TV by offering customers thousands of programmes on-demand for a monthly fee that's a fraction of the cost of a multichannel cable or satellite package. In New York, Netflix stock closed at $346.40 on Tuesday, valuing the streaming giant at roughly $154 billion.

Netflix, Inc, an Internet television network, engages in the Internet delivery of television (TV) shows and movies on various Internet-connected screens. Its biggest worldwide competitor, Amazon, has taken a much different route, pricing its Prime subscription at Rs. 129 per month or Rs. 999 per year. In the third quarter past year, Netflix posted $2.99 billion in sales.

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