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Streaming giant Netflix reported worse  than expected revenue and subscriber adds in it's second quarter earnings release Monday. The FANG leader announced much less domestic and international subscribers than forecast sending $NFLX down12% in after hours.

Netflix Stranger Things

 Stranger Things: Netflix's Most Popular Show in 2018

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

Earnings:

  • EPS of 85 cents beats 79 cents expected.
  • Revenue of $3.91 billion misses $3.94 billion expected by a Thomson Reuters consensus estimate

Reaction Netflix, Inc. NASDAQ: $NFLX

After hours 352.03 -48.47 (-12.10%)

(After closing $400.48 +4.68 (+1.18%) July 16, 2018)

Subscriber growth is the most crucial metric for Netflix. Growth in both Q417 and Q118 blew away earnings and the stock has continued to soar since, though cracks were seen Friday with $NFLX down 4.3% Friday. Momentum stocks need continuous upside suprises or the the lose, momentum.

NetFlix Q2 2018 Subscriber Highlights

  • Total streaming net adds: 5.15 million vs. 6.2 million expected consensus
  • Domestic streaming net adds: .670 million vs. 1.20 million expected by a StreetAccount estimate
  • International streaming net adds: 4.47 million vs. 5.00 million expected by a StreetAccount estimate

NFLX Subscriber Trend Q2 18

Netflix ended Q2 with $3.9B in cash and $8.3B in debt. The company reiterates it expects to continue raising debt to finance its content spend.

Guidance:

  • Forward guidance on Q3 EPS: 68 cents per share vs. 73 cents per share expected by a Thomson Reuters consensus estimate
  • Forward guidance on Q3 revenue: $ 3.988 billion vs. $4.13 billion expected by a Thomson Reuters consensus estimate
  • Forward guidance on streaming adds: 5 million vs. 6.00 million (650,000 domestic and 4.35 million international) expected by StreetAccount

NFLX Earnings Q2 18

Netflix First Quarter 2018 Earnings Recap

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%) Apr 16, 2018)

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 $NFLX 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. $NFLX plans to spend $7 billion on content in 2018.
 
Source: NetFlix, TradersCommunity, AlphaStreet

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