Netflix Growth Beats Estimates

January 18, 2019
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There’s good news for Netflix (NASDAQ: NFLX) investors this week. The company has released its latest earnings report, revealing increases in subscriber numbers and sales. Analysts are upbeat about the future of the company, despite a decline in stock during after-hours trading on Thursday.

Over 8 Million New Subscribers in the Holiday Season

Netflix signed up 8.8 million new customers during the holiday quarter, beating expectations of 7.5 million. Figures were achieved without the help of the trial-subscriptions that have been used in previous reports. As of Q4 2018, Netflix only counts full subscriptions in its quarterly figures. This will allow for better forecasting moving forward.

Earnings per share also beat expectations. The company reported earnings of 30 cents per share from sales of $4.19 billion. The average consensus on Wall Street was that the figure would be around 24 cents per share on sales of $4.21 billion.

Competition Remains a Threat

Netflix already competes with streaming services from Hulu, HBO, and Amazon. The competition will heat up again in 2019, with Disney and Warner Media set to enter the streaming market with their own services.

Original properties from Netflix have expanded in recent months. Heavy investment in feature films and shows could help to secure subscription numbers in the future. Netflix won 5 Golden Globe awards this year, bringing more prestige and consumer mindshare to the network.

The company is doing all the right things to ensure that it remains relevant, but that doesn’t change the fact that competition will be fierce in the coming months. Investors can take confidence from continued growth but should also be wary of how the market could change as new streaming services come online.

Netflix Stock Down After Hours

While Netflix closed on Thursday with a 0.51% gain, share price tumbled in after hours trading, losing around 3%. Some investors wanted higher subscription and revenue growth from the company.

Overall, analysts are not concerned that the after-hours movement will have a lasting impact. It is still up 31.95% year to date, and 60.21% for the last 12 months. The average analyst consensus is that the stock is currently “overweight”, meaning that it offers more value and potential than other comparable stocks.

Netflix remains a compelling investment, and Thursday’s price slide could even represent a good opportunity for new buyers.

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