Netflix eases Wall Street worries with record quarter


17 October, 2018

The streaming company released a record 676 hours of original programming in the third quarter, according to Cowen & Co, the first time it has exceeded 500 hours in any quarter. Net income came in at 89 cents per share, beating Wall Street's number by 21 cents a share. Further, it issued aggressive guidance for Q4 2018, saying it expected an additional 9.4 million subscribers.

Subscriber additions: 7 million total. And it brought in 5.87 million global subscribers, topping the 4.46 million estimate.

The shares jumped by 14.3 per cent to $396 in after-hours trading. During that quarter, Netflix had a dearth of new programming that resonated with viewers the way hits like House of Cards and Stranger Things had done in the past. In a letter to shareholders, CEO Reed Hastings and other executives attributed its third-quarter success in part to a strong content slate that included new seasons of Orange Is the New Black, Ozark, and Marvel's Luke Cage. Netflix added almost 7 million subscribers in the quarter, easily beating its estimates - and Wall Street expectations - of 5 million. Said eMarketer media analyst Paul Verna.

Netflix never identifies which shows are most successful.

The region could buoy Netflix for years to come if the service can convince even 10% of its inhabitants to subscribe. And even United States growth supposedly remains strong, despite fears of a stagnating market.

"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. "That's a really good number for a market that's this mature".

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Netflix has upended the economics of pay TV by offering customers thousands of programs on-demand for a monthly fee that's a fraction of the cost of a multichannel cable or satellite package.

Rivals have long groused that Netflix can spend ungodly sums without ever having to make money itself.

There is more uncertainty ahead too as competition moves in: Apple has been beefing up its offerings, and Disney is expected to debut its much anticipated direct-to-consumer service next year.

The firm plans to spend as much as $8bn on content this year, with more than a quarter devoted to original programming.

"My competitors have Netflix turning cash flow positive in two years, that's just insane - it's not going to happen", Wedbush technology analyst Michael Pachter said on Yahoo Finance's "Midday Movers' show".

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