Netflix crushes estimates with record quarter, Companies & Markets News & Top Stories

Netflix shares soar as it announces 6.96m new members

Netflix shares soar as it announces 6.96m new members

Netflix demonstrated that its second-quarter miss was an anomaly, reporting record third quarter subscriber growth. Netflix has $503 highest and $333 lowest target. Still, Netflix is one of the top performers in the S&P 500 this year with a gain of 80 percent.

As USA Today reports, Netflix's third quarter "serves as a comeback after it failed to meet its own performance predictions in Q2 (falling short of its 1.2 million subscriber target) that sent its stock plunging". This could lead the company to bring in a new plan that is positioned below its cheapest plan at the moment in order to reach more users looking for video streaming options.

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

On the financial front, Netflix earned $403 million on revenue of $4 billion in the quarter.

"So, when we invest in an original show, we find, we're having a better payback in terms of people watching and appreciating Netflix and valuing their subscription". Imperial Capital cut their price objective on Netflix from $503.00 to $494.00 and set an "outperform" rating for the company in a research report on Monday, August 13th. "The silver lining is that Netflix will have less content available to it, resulting in more stable cash burn; unfortunately, this subjects the company to the potential for slowing subscriber growth should its original content offering fail to achieve the quality and quantity of the lost content", the analyst added. The company had forecast gaining 4.35 million global subscribers and 650,000 domestic subscribers during the period.

Netflix's net income rose to $402.8 million, or 89 cents per share, in the third quarter ended September 30, up from $129.6 million, or 29 cents per share, a year earlier. That's up 34 percent from the same period past year. Revenue expanded 2.4 percent, to $4 billion. Despite growing competition, it seems that Netflix's constant investment and production of exclusive programming is helping drive the company forward!

The company expects to sign up 9.4 million new subscribers this quarter, far above the 7.18 million average of forecasts compiled by Bloomberg. During the same quarter previous year, the firm earned $0.15 EPS.

Growth in both the USA and worldwide were slower than management had been expecting.

"We find it fascinating that investors expect Indian households to spend more on Netflix than they spend on cable TV or cell phones, and to spend almost as much as they spend on broadband", Pachter said.

Investment analysts at B. Riley reduced their FY2020 EPS estimates for shares of Netflix in a note issued to investors on Friday, October 12th.

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