Coverage: Netflix rises after reassuring investors
Netflix Inc. hooked 7 million new streaming subscribers from July to September, a third more than Wall Street had expected, reassuring investors who had worried the company was facing a slowdown in its fast-paced growth.
Lisa Richwine and Vibhuti Sharma of Reuters had the news:
The record number of additions for the period brought Netflix’s customer base to 137 million worldwide, making it by far the world’s biggest online subscription video service.
Its shares, already up about 78 percent so far this year, jumped 14 percent to $394.25 in after-hours trading, helping up some other high-tech stocks.
The leap in subscribers — and the company’s shares — marks a sharp turnaround from three months ago, when investors sent Netflix shares tumbling 14 percent for missing Wall Street’s subscriber growth targets.
“The question at the end of Q2 was whether that miss was an aberration or signs of a longer-term slowdown in the business,” said Forrester Research analyst Jim Nail. “The answer: an aberration, likely the results of a somewhat low volume of new content last quarter.”
Michelle Castillo of CNBC.com reported that the company wants to add 9.4 million more subscribers in this quarter:
The company is projecting it will add 9.4 million net subscribers during the fourth quarter.
“We’re getting a little better on the forecasting,” CEO Reed Hastings said after the earnings report. “I think by focusing going forward on paid [net adds] we’ll be able to be a little more accurate and focus on the fundamentals.”
Netflix will also be relying on its TV and film studios to make more of its own content, rather than licensing content. Shows including “Stranger Things,” “Big Mouth,” “The Ranch,” “Bright,” “Godless,” “The Kissing Booth,” “3%,” “Dark,” “Sacred Games” and “Nailed It” were created by Netflix studios. It also licenses shows that may have appeared on TV or in theaters before like “Shameless” or “Friends,” as well as obtains first-window rights to shows like “Orange is the New Black” and “13 Reasons Why.”
Dalvin Brown of USA Today reported that the growth primarily came from overseas:
The subscription growth was made up mostly by overseas memberships. 1.96 million domestic users signed up for the service compared with 5.87 million international additions.
“Netflix’s strong quarter will at least temporarily put to rest questions over the long-term viability of its business and shift focus to the competition, which continues to significantly lag the streaming giant,” said eMarketer media analyst Paul Verna. eMarketer is a market data and research company.
Netflix’s strong Q3 serves as a comeback after it failed to meet its own performance predictions in the Q2 (falling short of its 1.2 million subscriber target) that sent its stock plunging.