Netflix, Inc. (NFLX) Stock Is Running on Original Rocket Fuel

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Netflix, Inc. (NASDAQ:NFLX) is one of the latest companies’ whose stock made a major move post-earnings. And despite previous uncertainties and skepticism on the Street, it was drastically to the upside — nearly 20% for Netflix stock, to be exact.

Netflix, Inc. (NFLX) Stock Is Running on Original Rocket Fuel

Third-quarter results were released after the close on Monday, with earnings of 12 cents per share up from 7 cents per share last year and 6 cents better than estimates. NFLX revenue also beat, coming in at $2.29 billion compared to expectations for $2.28 billion thanks to original content including Stranger Things and Narcos.

This was the first time that Netflix’s quarterly sales surpassed $2 billion.

Netflix added a total of 3.57 new memberships in the quarter — 370,000 from within the United States and 3.2 million internationally — which was well ahead of both management’s forecasts and analysts’ expectations. (There had been concerns about a possible disappointment in subscriber growth.) And streaming margins increased to 18.8% from 17.5% last year.

Results Drive Netflix Stock

The entertainment streaming company soared the day after the numbers were released. The 19% surge in Netflix stock marked its best daily performance since April 2013.

The company has forecast continued growth. Looking ahead to the current quarter, management expects to add 5.2 million new memberships — 1.45 million in the U.S. and 3.75 million abroad — while earning 13 cents a share. Wall Street had been looking for the addition of about 5 million new memberships — 1.27 million from the U.S. and 3.75 million internationally — and earnings closer to just 7 cents per share.

Another key aspect of the report was management’s comments on original content.

Netflix will release more than 600 hours of premium original programming this year, and the company expects that to increase to more than 1,000 in 2017. The Netflix-addicted binge watchers should be thrilled!

Of course, this original content is costly, but it’s Amazon.com, Inc.’s (NASDAQ:AMZN) strategy all over again of building a global powerhouse and then fending off the competition. Moreover, it underscores the central point in my approach to become part owners of great American companies.

It’s very clear that the world wants NFLX’s products and services, which tells me that Netflix stock will only continue to prosper.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/10/netflix-inc-nflx-stock-original-programming/.

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