Netflix Stock Streams Higher, Adding Almost 5M Subscribers

The Associated Press
The Associated Press

Netflix, Inc. beat its aggressive prediction that it would add 4 million new streaming subscribers in the quarter ending March by adding 4.88 million subscribers. After shares leaped 47% over the past three months, the fabulous numbers sent the stock up about 11 percent to $531 in after-hours trading on Wednesday.

Analysts had expected a “net add” in subscribers to 61 million, but the company reported that it topped 62 million subscribers world-wide, including free trials. About 60 percent of the streaming TV and DVD-by-mail provider’s growth was in the U.S., with a “net add” of 2.28 million.

Despite some slowing last year, Netflix is back with a vengeance, as its proprietary original programming–like the third season of House of Cards, the premieres of thriller drama Bloodline, and the Tina Fey co-created comedy Unbreakable Kimmy Schmidt–received tremendously positive customer response.

The international operations expansion sucked up $65 million in cash, up from $35 million last year, as the company now has 2.6 million of international subscribers. The firm says it is determined to quadruple from 50 to 200 countries by the end of 2016.

Netflix will raise spending by 50 percent to $101 million this quarter. Management made clear that Netflix is on a mission of world conquest.

The company would have earned $.77 cents a share and beat Wall Street’s average earnings projection of $.69, according to Thomson Reuters.

Netflix warned analysts that it only expects to earn $.26 cents a share this quarter, down from $1.15 a year ago.

To fuel some of its international growth, Netflix plans to shift some of its U.S. marketing budget overseas and promote its original shows more than the streaming service itself. The Internet TV pioneer is competing against more old-line media and tech companies that are defensively launching their own streaming television.

After HBO introduced its $15-a-month streaming service, Comcast Corp.’s NBC Universal announced that it is planning its own streaming offerings outside the traditional pay-TV bundle. Dish Network Corp. shook up the industry when it announced live streaming for $20 a month via “Sling TV.” Apple TV says it is planning a narrow streaming package in the fall.

Chief Executive Reed Hastings, in a letter to shareholders, stated that concerns about competition for Netflix are unwarranted, arguing that HBO and Netflix aren’t substitutes for one another because of their differing content. He believes the “skinny” TV bundle offerings represent a bigger threat to the traditional pay-TV bundle than to each other.



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