Netflix posts huge gains as subscriber growth soars

Markets Insider

Markets Insider

Netflix has tripled in value over the past three years by posting record subscriber growth that consistently exceeds Wall Street forecasts. The company has parlayed that into huge gains for investors. The company also forecast growth of 650 000 domestic subscribers and 4.35 million internationally. The Los Gatos, California-based streaming company released a record 676 hours of original programming in the third quarter, according to Cowen & Co. Netflix signed up 6.96 million customers in the quarter, according to a statement on Tuesday (Oct 16), boosting its global total to 137.1 million. Streaming revenue grew 36% from the same quarter a year ago.

Wedbush analyst Michael Pachter was another skeptic, saying he was "mystified by the investor love affair with Netflix's India opportunity", pointing to price differences in Netflix's monthly plans versus cable TV in the country. The company, founded in 1997 as a DVD-by-mail service, posted its strongest years of subscriber growth in 2016 and again in 2017 - in its 20th and 21st years of operation. Producing world-class content isn't cheap and Netflix is likely to see a cash burn increase from $2 billion last year to 3.3 billion this year.

"After handily blowing away Street expectations on subs in the last few years, this is a clear speed bump for Netflix as the worldwide miss was most concerning, given this is the linchpin to the core growth thesis for the coming years", GBH Insights technology analyst Daniel Ives said at the time, suggesting a "speed bump" rather than the start of a negative trend.

How to watch Brewers vs. Dodgers, NLCS Game 3
Responded Grandal when asked about the change: "They're losing confidence in me? Not really. Chris Taylor has quietly been one of the Dodgers' best hitters this postseason.

That's because at its current voracious pace of spending on original content such as House of Cards, Netflix is running the risk of ballooning debt and surging interest payments that could surprisingly hammer the bottom line.

Overall, Wall Street continues to be enamored with the streaming service. Netflix is about as close to an "open-ended growth" story as you can find in today's market, he said. Walt Disney and AT&T, the owner of HBO and Warner Bros., have announced plans to sell new streaming services next year, while Amazon.com just released its biggest hit yet in "Jack Ryan".

"We feel like we have a long, long runway ahead of us in India", said Peters. The after-hours jump, to $346 per share, means the stock price has climbed almost 70 percent since the beginning of the year. But investors may wonder where the money is going if Netflix misses again.

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