Netflix Beats Wall Street Expectations – The Most Important Piece Of Data In Netflix Earnings

Bollywood Red Netflix subscribers growth Mark Mahaney

Netflix posts its biggest-ever quarterly subscriber growth that crushed its own guidance resulting in Netflix shares surging almost 9 percent in late trading. It beats Wall Street’s expectations and sets new guidelines for itself. The company said it added 7.05 million subscribers during the fiscal fourth quarter. This figure was well above its own expectations of 5.2 million, also according to Netflix it was the largest-ever quarterly subscriber growth in its history. The streaming giant Netflix has shown almost 900% growth over the past five years. Between fiscal 2011 and 2016, Netflix’s annual revenues rose 175% from $3.2 billion to $8.8 billion. During those five years, its total streaming subscribers worldwide has gone up from 23.5 million to 93.8 million as it pivoted away from DVD-by-mail subscriptions and expanded to overseas markets.

Bollywood Red Netflix subscribers growth Mark Mahaney 1

Last quarter, Netflix’s total subscriber base has grown 25% annually,with 10% growth in the U.S. and 48% growth overseas. The analysts expect Netflix’s revenue to rise 27% this year and another 20% next year. Meanwhile, Netflix’s growing portfolio of acclaimed original shows — like House of Cards, Daredevil, and Stranger Things — are bringing in subscribers and reducing the networks dependence on third-party content which is working well in it’s favor.

Wall Street is expecting for Netflix to project more American subscribers in 2017 than 2016, said Mark Mahaney, managing director at RBC.

“When the year is all said and done, we think [subscribers] are going to be higher this year than last year, and that’s what takes the shares higher.” – Mark Mahaney, MD (Netflix)

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The number of domestic subscribers, international subscribers in the quarter, and guidance for international subscribers will be the the key metrics that will make or break Netflix shares after earnings, said Mahaney.

With shares of the streaming service hitting an all-time intra-day high of $135.40 a share on Tuesday, the analysts expectations from Netflix has gone up. They expect Netflix to add 1.44 million net domestic streaming subscribers and 3.73 million net international streaming subscribers.

“Expectations are highest with this name of all the large cap internet names,” Mahaney said.

“But just keep in mind, we’re going through this seismic shift away from paid TV subscribers to streaming subscribers, and that’s why Amazon and other companies are spending so much time on this space,” Mahaney said. “Ithink Netflix is far and away the leader in this space.”

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