Netflix crowns excellent third quarter
- Author: Anthony Vega Oct 17, 2018,
Oct 17, 2018, 18:45
While Netflix blamed the poor quarter on bad forecasting, the company's actions suggested programming was a factor. Net income came in at 89 cents per share, beating Wall Street's number by 21 cents a share.
Netflix seems to have found its long-form goldmine: The streaming service disclosed as part of its Q3 earnings report Tuesday that more than 80 million of its subscribers from around the world watched one of its "Summer of Love" rom-coms over the past few months. Further, it issued aggressive guidance for Q4 2018, saying it expected an additional 9.4 million subscribers.
Netflix had told investors it expected to add about five million members in the quarter.
Netflix on Tuesday reported strong third-quarter earnings, sending the company's stock up 14 percent as the streaming service saw a sharp upward turn from its dismal results three months ago. During that quarter, Netflix had a dearth of new programming that resonated with viewers the way hits like House of Cards and Stranger Things had done in the past.
Netflix signed up 6.96 million customers in the third quarter, boosting its global total to 137.1 million.
"Rising interest rates could make Netflix increasingly vulnerable to higher cost of capital", CFRA research analyst Tuna Amobi said.
During the September quarter, Netflix added about 676 hours of original programming in the United States, a 135 percent increase from a year earlier, according to Cowen and Co analysts.
Q3 is also thought to have seen more people flock back to the platform thanks to new seasons of its most popular shows. "We're thrilled to be growing internet entertainment across the globe", the company said in a statement. "Even the US number was better than I thought it would be". "Quotas, regardless of market size, can negatively impact both the customer experience and creativity", Hastings said. The after-hours jump, to $346 per share, means the stock price has climbed almost 70 percent since the beginning of the year. "That's a really good number for a market that's this mature". Sales grew 34 percent to $4 billion, meeting Wall Street forecasts.
Hastings, 58, suggested that he wasn't anxious about the competition.
On October 10, WarnerMedia announced it is entering into the streaming game with a direct-to-consumer streaming service set to launch at the end of next year.
"My competitors have Netflix turning cash flow positive in two years, that's just insane - it's not going to happen", Wedbush technology analyst Michael Pachter said on Yahoo Finance's "Midday Movers' show".