Wednesday, 26 April, 2017

Netflix growth misses mark despite strong earnings

Netflix is due to report earnings after the close on Monday Netflix is due to report earnings after the close on Monday
Debra Rodriguez | 19 April, 2017, 02:11

The video streaming company offered a better-than-expected subscriber forecast for the current quarter when it reported results Monday evening, saying it expects to add a combined 3.2 million customers domestically and internationally in the period.

The streaming company made the pledge as it revealed its worldwide business registered a profit for the first time on the back of revenues that hit the $1 billion mark.

The video service added almost 5 million subscribers during the first three months of the year to end March with 98.7 million customers in about 190 countries.

"It wasn't a strong quarter for Netflix in terms of content", said eMarketer senior analyst Paul Verna.

"But Netflix clearly had a vision before those devices became so ubiquitous", the analyst said.

The company also revealed Monday it is on the verge of surpassing 100 million subscribers globally, and it could reach that number as soon as this weekend. Netflix concluded March with nearly 48 million users outside the U.S.

The company expected it would add about 8.15 million subscribers overall during the first half of this year as compared with 8.42 million in the same period in 2016. U.S.net additions slowed to 1.4 million from 1.9 million in the previous quarter. Is the stock a buy or sell?

The firm had predicted that it would see a growth of 5.2 million subscribers in this quarter, however the streaming firm only managed to gain 4.95 million. Other cable channels also are contributing internet-only benefits as more viewers, particularly younger people, avoid traditional TV bundles and subscribe to streaming services preferably. Netflix's services extend from $8 to $12 a month, with the most economical option at $10.

Netflix has a model that works and grows the value of the service over time.

"Our viewing is very large and growing, but nowhere near as big as YouTube", Hastings said, in response to a question about how much video its customers watch on Netflix. Consolidated revenues rose to $2.6 billion, delivering a net profit of $178 million.

Netflix shares traded down about 0.8% in after-hours trading to $146.02, in a 52-week range of $84.50 to $148.29. In the shareholders letter, Netflix noted that its recent comedy special from Dave Chappelle was its most-viewed comedy special ever and that its global standup specials like French comedian Gad Elmaleh's Gad Gone Wild have been hits in their target markets. Revenue was projected to increase 35 percent year over year to $2.64 billion in the first quarter.

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