Published: Fri, October 19, 2018
Finance | By Loren Pratt

Netflix Sends Stock Soaring After Beating Earnings Expectations in Q3

Netflix Sends Stock Soaring After Beating Earnings Expectations in Q3

The company had previously projected $3 billion to minus $4 billion. Netflix, Inc. (NASDAQ:NFLX) has risen 99.81% since October 17, 2017 and is uptrending. Also, CFO David B. Wells sold 1,000 shares of the firm's stock in a transaction that occurred on Monday, August 20th.

Lower-than-expected subscriber growth for the second quarter sent Netflix shares into a tailspin that knocked 20 percent off their value in a month.

The streaming superpower, which hit its $4bn (£3.03bn) revenue estimate, was under pressure to up subscriber growth after falling short of expectations in the previous quarter.

Hargreaves is less optimistic over the company's ability to raise its profit margins over the long term due to the company's fourth-quarter forecast for contribution profit, a measure of profitability.

Netflix being synonymous for content streaming looks set to continue for the foreseeable future after its latest earnings report for Q3 of this year.

Analysts estimate that it added about 676 hours of original programming in the USA in the most recent quarter, 135% more than in the same period a year earlier.

"Given the decreasing efficiency of content and marketing spending, we are decreasing our global contribution profit estimates", he wrote.

Netflix is investing more than $8bn in entertainment programming this year to lure new customers around the world.

"We don't believe in 'open-ended growth stories.' But, darn, (Netflix) is about as close to one as you can find in today's market", RBC analyst Mark Mahaney said in a note.

The company expects to sign up 9.4 million new subscribers this quarter, far above the 7.18 million average of forecasts compiled by Bloomberg.

In an effort to provide more consistently accurate subscriber numbers moving forward, Netflix will stop reporting total memberships and focus instead on paid memberships in Q4, eliminating the fluctuations caused by members who abandon the service at the end of the one-month free trial period.

Netflix, Inc., an Internet television network, engages in the Internet delivery of television shows and movies on various Internet-connected screens.

Netflix revenue in the quarter increased 34% year-on-year to almost $4bn, while profits more than tripled to $403m.

Netflix is planning a new film and television production hub in New Mexico; new research finds that one-third of "gluten-free" foods sold in US restaurants actually contains trace levels of the substance.

"Disney and Fox are likely to migrate content that is now licensed to Netflix to a Disney-sponsored standalone service next year".

The ratio for the companies in the S&P 500 is now 17.8 times the earnings they are expected to make this year, according to data from S&P.

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