Netflix adds seven million subscribers over summer

Andrew Cummings
October 20, 2018

Q4 for Netflix typically has less profit because of the way the movie licenses are paid out during the year, so they advised that although it will likely be better than Q4 2017, shareholders should expect a typical slump in December profit but should expect net gains in subscriber count again.

Netflix regained its stride with surprisingly strong subscriber growth during the summer after an unexpected stumble during the spring triggered worries its video streaming service was losing its allure. Netflix, Inc. has a 52-week low of $178.38 and a 52-week high of $423.21. Netflix's report was the first from one of the big technology companies that helped drive the S&P 500 to a record last month. It appended 7 million subscribers in the time span a more hefty amount that it appended in third quarter of past year.

Netflix added seven million new customers in the three months to September, bringing its global total to more than 137 million.

Media companies that once sold programs to Netflix for hundreds of millions of dollars are now building their own on-demand services to compete head on.

The number of both USA and worldwide subscribers grew at a clip over the month, with Netflix adding 1.09 million new subscribers in the USA and 5.87 million internationally.

Netflix also announced that it plans on spending $1bn on producing new content over the next 10 years, bolstered by a new production hub to open in the New Mexico city of Albuquerque. The company also gave an upbeat forecast for the fourth quarter, sending the shares soaring in extended trading.

The rise exceeded expectations for adding new subscribers during the third United States quarter. Over the last quarter, insiders sold 420,428 shares of company stock worth $149,570,353.

In a letter to shareholders Netflix said that it expected operating margin to be nearer 10pc for 2018, meaning that it will see margins drop in comparison to a year ago. Revenue expanded 2.4 percent, to $4 billion.

Netflix arrived in India at the beginning of past year.

Analysts pointed to the streaming giant's "solid trends" in India, and said homegrown shows there like Sacred Games and Ghoul bode well for future growth as it ramps up across some of the developing world's most populous markets. The actual total included about one million new subscribers in the U.S. and nearly 5.9 million overseas.

"We're super encouraged with India and the growth that we've got early on, but we know it's going to be somewhat of a tough market".

Neil Begley, a senior analyst at Moody's Investors Service, estimated that Netflix may spend closer to $9 billion on content this year, but he said keeping negative free cash flow to about $3 billion would not change the company's capital needs. Wall Street anticipated earnings per share of 68 cents on sales of $4 billion.

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