A Netflix ‘Miss’ Sends Shares Bouncing

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The OTT juggernaut that is Netflix has hit a speed bump in its swift rise toward $150 a share on Wall Street.


In after-hours trading on Monday (4/17), shares of NFLX as of 7pm Eastern were up 1.3%, to a new record high of $149.17. This was achieved after the stock dipped 2.8% after the Closing Bell, putting long-term investors at ease.

Why the brief dip? The company released a rather positive Q1 earnings report that saw Netflix beat the street on its earnings per share. But, it also saw a decline in subscribers.

In midday trading today, investors turned on Netflix, sending shares swooning some 3.6% as of 1:24pm Eastern, to $141.98, in very active trading.

At the closing bell, Netflix finished down 2.6%, to $143.36.

Volume was at 19.28 million shares; its average trading volume is 5.7 million shares.

Even with the stock dip — and headlines across the financial press discussing the Netflix “miss” — it’s been an incredible 2017 for the OTT company, and today’s performance on Nasdaq is not likely to be a harbinger for a slowdown in growth at Netflix.

SUBSCRIPTION STALL

Subscriptions “were a little light,” both domestically and nationally, Canaccord Genuity analyst Michael Graham told CNBC in an interview just after the Closing Bell on Wall Street Monday. However, Q2 guidance for subscribers is ahead of the consensus estimates. “I feel like it’s just a little bit of lumpiness,” Graham said, noting that Netflix “has had this lumpiness before.”

Netflix enjoyed Q1 2017 revenue of $2.64 billion — in line with estimates. That’s up from revenue of $1.96 billion in Q1 2016.

Operating income soared to $257 million, from $49 million, year-over-year in Q1.

Net income jumped to $178 million (40 cents per diluted share), from $28 million (6 cents).

But, U.S. revenue is slowing down, analysts fear. Paid memberships at the end of Q1 numbered 49,375, compared to 45,714 in the year-ago period.

International net additions decreased 22% year over year.

Meanwhile, marketing dollars are set to exceed $1 billion, and it is unclear how this may impact total net income. Its earnings forecast also came up short of street estimates for Q2.

As the AP sees it, it will be a positive — its technology writer notes that Netflix is “on the verge of surpassing 100 million global subscribers, a testament to how much the video streaming service has changed the entertainment landscape since its debut a decade ago.”

This could happen by the start of the 2017 NAB Show, which has embraced OTT along with digital distribution of broadcast and pay-TV channels.


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