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Streaming giant Netflix reported better than expected revenue in it's first quarter earnings release Monday. The FANG leader announced many more domestic and international subscribers than forecast sending $NFLX up 6% in after hours.

Netflix Stranger Things

 Stranger Things: Netflix's Most popular Show in 2018

Netflix is the first FANG company to release March quarter earnings.

Earnings:

  • EPS of 64 cents adjusted matching 64 cents expected.
  • Revenueof $3.7 billion ahead of $3.69 billion expected by a Thomson Reuters consensus estimate

Reaction Netflix, Inc. NASDAQ: $NFLX

After hours 328.94 +21.16 (+6.88%)

(After closing 307.78 −3.87 (-1.24%) Apr 16, 2018)

Subscriber growth is the most crucial metric for  Netflix. Growth in both Q417 and now in Q118 blew away earnings and the stock surged after hours on the beat. Momentum stocks need continuous upside suprises or the the lose, momentum.

NetFlix Q1 2018 Subscriber Highlights

  • Total streaming net adds: 7.41 million vs. 6.5 million expected by a StreetAccount consensus
  • Domestic streaming net adds: 1.96 million vs. 1.48 million expected by a StreetAccount estimate
  • International streaming net adds: 5.46 million vs. 5.02 million expected by a StreetAccount estimate

Guidance:

  • Forward guidance on Q2 EPS: 79 cents per share vs. 65 cents per share expected by a Thomson Reuters consensus estimate
  • Forward guidance on Q2 revenue: $3.9 billion vs. $3.89 billion expected by a Thomson Reuters consensus estimate
  • Forward guidance on net adds: 6.2 million vs. 5.24 million (974,000 domestic and 4.27 million international) expected by StreetAccount

Note: On Oct. 5 last year $NFKX raised its U.S. Standard and Premium plans by $1 and $2 per month, respectively, to $11 and $14. In 2016 $NFLX has said price hikes for customers previously grandfathered in at lower prices hurt subscriber growth for a while. The marketplace appears to have absorbed current prices.

Content Library and Costs

Walt Disney Co. $DIS has said it will pull its films off Netflix by 2020 end and launch it's own streaming service in 2019 that will become the exclusive home for Disney, Pixar, Marvel and Star Wars films.
 
Millarworld 1
 
Netflix has also made moves on this front with it's First Acquisition With Comic Publisher Millarworld. $NFLXplans to spend $7 billion on content in 2018.
 
Source: NetFlix, Alpha Street, TradersCommunity

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