Netflix growth misses mark

20 April, 2017, 11:39 | Author: Leticia Walters
  • Netflix growth misses mark

Netflix reported slower growth than analysts were predicting in the first quarter - held back by a dearth of big releases like "House of Cards" that generate fresh subscriber signups at home and overseas.

Netflix plans to spend US$1 billion (S$1.4 billion) this year on marketing to attract subscribers. Yet on Monday evening the shares hit an all-time high, giving Netflix an enterprise value of more than $US66 billion on $US822 million in ebitda in the past 12 months. Guggenheim lifted their price objective on shares of Netflix from $150.00 to $160.00 and gave the stock a "buy" rating in a report on Thursday, January 19th.

Netflix's stellar stock performance has so far hinged on its ability to continually add new subscribers.

Bolstered, in part, by these partnerships, Netflix projects it will reach the 100-million mark this weekend, the company said in its release of its first quarter earnings on Monday.

However, the DVD business continues to be in trouble with revenues (4.6% of total revenue) declining 16.8% year over year to $120.4 million.

Netflix had $1.341 billion in cash and cash equivalents (and short-term investments) as of Mar 31, 2017, compared with $1.734 billion as of Dec 31, 2016. Analysts are forecasting net income of $477.2 million, or $1.09 a share, on revenue of $11.2 billion, based on the average of estimates compiled by Bloomberg. The analyst also said he estimates revenues of $2.76 billion and EBIT of $217.4 million. Reilly Financial Advisors LLC raised its position in Netflix by 75.9% in the first quarter. Equities analysts forecast that Netflix, Inc. will post $1.11 earnings per share for the current fiscal year. Finally, CWM LLC raised its position in Netflix by 474.3% in the first quarter. Following the transaction, the director now owns 8,012 shares of the company's stock, valued at approximately $1,152,926.80. Institutional investors and hedge funds own 80.42% of the company's stock.

Netflix is working towards becoming a global entertainment network.

In the International Streaming segment, the company recorded 47.89 million members compared with 34.53 million in the prior year quarter.

Discussing competition, Netflix predicted the launch of new over-the-top subscription TV services in the USA - like YouTube TV and Hulu's forthcoming TV offering - will not have "much of an impact" on the business as Netflix is "largely complementary" to pay TV packages. The International streaming segment includes services that streams content to its members outside the United States.

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