Market Overview

Some Perspective On Netflix's Subscriber Figures

Some Perspective On Netflix's Subscriber Figures

When Netflix, Inc. (NASDAQ: NFLX) reported second-quarter earnings Monday, the streaming service revealed that it added 5.15 million subscribers in the period — over 1 million less than its own guidance.

The news sent shares plummeting overnight as investors who were accustomed to the company beating its own estimates wrangled with the implications.

Commentators noted that despite the miss, Netflix’s growth rate still outpaces competitors by a wide margin. The company now has 130 million users worldwide. It was announced last week that Netflix received more Emmy nominations than any other network — 112 across 40 titles.

Netflix called the quarter “strong but not stellar” in a letter to investors; Comcast Corporation (NASDAQ: CMCSA) executives would weep with joy to see such numbers.

As if to add insult to injury, Netflix CEO Reed Hastings said last year that the company's biggest competitor is sleep.

Some Perspective On Growth

Over the past four quarters, Netflix’s subscriber count has been growing by an average of 6.05 million users per quarter.

From the end of 2010 through 2017, Facebook, Inc. (NASDAQ: FB), the online platform with a user base second only to Google, saw its monthly active user count increase by 350 percent. Over the same period, Netflix's subscriber count grew 587 percent.

The figure — not to mention the arguably much larger networking effects benefitting Facebook and higher hurdles Netflix faces entering new foreign markets — is nothing short of incredible.

Netflix’s total subscriber count has grown exponentially since it first began offering streaming internationally in 2010. This is mostly the result of the incremental additions of new markets, which now represent nearly half of its customers. Looking at just U.S. figures, growth has been roughly linear over the same period — and at a rate that suggests it will be many years until customers start becoming harder to find.

Price Action

Netflix opened 14 percent lower Tuesday following the earnings report but recovered over half of the loss by the close. Shares dropped slightly Wednesday and Thursday as a slew of analysts cut their price targets, although the vast majority maintained Buy ratings. The stock was was set to close Thursday down 2.96 percent at $364.04.

Related Links:

Survey: More Than One-Third Of Millennials Prefer To Watch Netflix On TV Over Cable

Stifel Still Likes Netflix's Long-Term Outlook, Upgrades Stock To Buy

Photo courtesy of Netflix. 

Posted-In: Reed HastingsEarnings News Top Stories Media Best of Benzinga


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