Netflix shares on track for worst day in five months

Apr 19, 2017, 01:38
Netflix shares on track for worst day in five months

Investors have permitted Netflix to operate near break-even on the expectation that the company, which expects to top 100 million customers this week, will continue to grow rapidly, especially outside the U.S. Chief Executive Officer Reed Hastings has also pledged to deliver material profits starting this year.

Helped by a rally in technology stocks, Netflix has soared 15 percent this year.

"Netflix ended 1Q:17 with 98.75mm subscribers and noted it expects to eclipse the 100mm subscriber mark this weekend, giving the company around 40% of its expected quarterly net adds in just three weeks."

"Everybody watches TV and almost everybody has the internet, so I don't see anything that's going to stop Netflix from getting to most people in the United States and then eventually hopefully most people around the world", Hastings said. The first quarter, lighter on new releases, was the company's most profitable ever and the first time global operations made money.

The Los Gatos, California firm presently has a market value of around $63 billion.

Analysts were expecting slower growth this quarter, after Netflix expanded to more than 130 new countries in the year-earlier period. However Hastings is hopeful they have ways to catch up with YouTube.

The inclination has presented Netflix with more rivalry in the contest for home entertainment budgets.

"From this perspective, the platform will have already reached ~40% of their 2Q guide (+3.2M subs), with growth likely somewhat front end loaded due to the early success of "13 Reasons Why"," wrote Janedis, adding that Netflix's content slate looks strong in the back half of the second quarter, with the return of "House of Cards", "Orange is the New Black" and "Master of None". Netflix's services extend from $8 to $12 a month, with the most economical option at $10.

"Since our members are funding these films, they should be the first to see them". Netflix had previously frozen prices for millions of subscribers at 2014 levels. Revenue will be $2.75 billion, versus Wall Street projections of $2.76 billion.

Netflix reported first-quarter customer numbers slightly below expectations, but said it still sees "gigantic" potential for worldwide growth.

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