Netflix Soars 17% After Q4 Earnings Beat
Netflix (NASDAQ: NFLX) is up more than 17 percent after the streaming video giant announced its fourth quarter results.
The company reported a Q4 EPS of $0.79 versus the Street estimate of $0.65.
Earnings per share were up 508 percent from the year-ago period.
Revenue arrived at $1.18 billion versus the Street estimate of $1.17 billion. Sales were up 25 percent year-over-year.
In a letter to shareholders, Netflix said that it ended 2013 with more than 44 million global subscribers -- roughly four million more than it had during the September quarter. More than two million of those subscribers were domestic.
At the same time, Netflix's DVD business continues to decline. During the December quarter in 2012, Netflix had 8.2 million domestic DVD subscribers. As of December 31, 2013, that number had fallen to 6.9 million subscribers.
"Domestic net additions in Q4 of 2.33 million were 14% higher than prior year Q4 at 2.05 million," Netflix CEO Reed Hastings and CFO David Wells wrote in their letter to investors. "The healthy y/y growth in net additions was likely fueled by our service improvements, marketing effectiveness, and sales of Internet connected devices.
"We expect this momentum to continue in Q1 with net additions of 2.25 million to exceed the prior year by about 11%. Running equal to, or slightly above, prior year net additions is a great outcome because it implies that at 33 million domestic members we're still in the middle section of the S curve of consumer adoption, with years of member growth ahead of us."
Netflix currently expects to end the first quarter with 48 million global subscribers.
Up until now, Netflix had been having a rough January on Wall Street. The stock rose more than 236 percent over the last 12 months but fell more than nine percent year-to-date.
If today's growth continues, it won't be long before Netflix erases its recent decline.
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
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