Netflix adds seven million subscribers over summer

Marco Green
October 19, 2018

The company reported third-quarter profits of $403m, compared with $129.6m a year earlier. Netflix had 32 analyst reports since May 15, 2018 according to SRatingsIntel. The additions bring Netflix's total subscriber count to 137 million (130 million paid). "The latter has not developed at a pace that exceeds our expectations, which suggests upside is more limited". Its hard to imagine any domestic growth is left for Netflix, so worldwide subscribers seem to be the likely target next quarter. Also, CFO David B. Wells sold 1,000 shares of the firm's stock in a transaction that occurred on Monday, August 20th.

Netflix regained its stride with surprisingly strong subscriber growth during the summer after an unexpected stumble during the spring triggered worries its video streaming service was losing its allure.

Not only did Netflix tops its projections for subscriber growth in the third quarter, it issued an optimistic outlook for the last three months of the year.

As Netflix's third-quarter outcomes portrayed it is faring well in other arenas. The Internet television network reported $0.85 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.80 by $0.05.

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

However, notwithstanding the impressive results, Wedbush analyst Michael Pachter sees clouds on the horizon and, as such, reiterates an Underperform rating on NFLX stock, while lifting the price target to $150 (from $125), which implies a potential downside of 57% from where the stock is now trading.

However, it sounds like its popularity might not necessarily save it this time, something that Peter Csathy, founder of digital media consultancy CreaTV Media says could be a "serious blow" for Netflix, along with the loss of any Disney content.

The video-streaming service is now the most expensive in India, with monthly subscription plans starting at Rs 500, more than double of its rivals in India. In the USA, where Netflix can now claim nearly half of households as users, the company expects to add 1.8 million new customers this quarter, bringing the domestic total to 60.3 million. In New York, Netflix stock closed at $346.40 on Tuesday, valuing the streaming giant at roughly $154 billion. Among the total new Netflix subscribers, it subscribed 1 million in the United States and some 5.9 million overseas. For the record Netflix produced shows had over 112 Emmy nominations, and 23 wins (a tie with HBO for the most).

Netflix didn't identify the most successful shows. Equities research analysts forecast that Netflix will post 2.67 EPS for the current year.

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