Netflix subscriber growth in the third quarter receives rave reviews at Wall St.
Netflix subscriber growth in the third quarter receives rave reviews at Wall St.
Netflix regained momentum with surprisingly strong subscriber growth in the third quarter, after an unexpected spring trip triggered fears that it was losing its appeal.
The video transmission service added 7 million subscribers worldwide from July to September, well above the company's goal of 5 million and surpassing analysts' projections.
Netflix was quite shy about its subscribers' targets for the period from April to June, which raised fears that the fiercest competition from Amazon, Hulu, HBO and other broadcast services were diverting viewers.
In a show of confidence, Netflix It predicted that it will pick up another 9.4 million subscribers during the current quarter ending in December, traditionally one of the busiest times of the company due to all the subscriptions given as holiday gifts. Even so, the forecast requires 1.1 million more subscribers than Netflix in the same period last year.
Netflix ended September with 137 million subscribers worldwide, including 58.5 million in the US. UU
"Netflix's solid quarter will at least temporarily put an end to questions about the long-term viability of its business," said eMarketer analyst Paul Verna.
Investors raised Netflix shares by more than 11 percent to $ 386.30 in extended trades. Shares still remain below their historical high of $ 423.21 in June, just before Subscriber Growth subscriber Netflix announced in July.
Subscriber growth has always been more important to investors' Netflix perceptions than their relatively small earnings. Investors are confident that Netflix will grow quickly to gain an insurmountable edge over streaming rivals in an increasingly crowded market.
In an effort to be more precise and reduce the volatility in its actions, Netflix plans to exclude people in the free trials of their service from their subscriber numbers. In a letter to shareholders on Tuesday, Netflix said it believes that paid subscribers are now a more stable indicator of how well the service is performing.
"I'm afraid that the story (from the second to the third quarter) is probably a prognostic problem rather than any change in the business," Netflix CEO Reed Hastings said during a comment on an online video.
On the financial front, Netflix earned $ 403 million in revenue of $ 4 billion in the quarter. But the company continued to spend cash to pay for its programming, which includes a selection of critically acclaimed programs such as "Stranger Things," "Orange Is The New Black," and "Ozark."
In a coup, the Netflix shows won 23 Emmys at the awards ceremony last month, tying HBO with the most among all the television networks.
The laurels are expensive. Netflix had a negative cash flow of $ 859 million in the third quarter, almost doubling from a negative cash flow of $ 465 million last year. The trend raises the possibility that Netflix has to borrow money to pay their bills, something that is becoming more expensive as interest rates rise.
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