With Netflix (NASDAQ: NFLX) back on the wall, which was exposed to strong winds in the form of in-depth competition with unscrupulous prices and weak momentum following a rare shortage of subscribers in the second quarter, the leading premium service remained surprisingly well-publicizing the third Quarterly results shortly after the market close on Wednesday. The Netflix Stock rose in the financial update initially even higher and noted after Wednesday for the first time in more than a month back at over 300 US dollars.
The surprise is that Netflix has not met its previous subscriber forecast for the three months ending in September. It closed the third quarter with 6.77 million more premium streaming accounts globally than at the beginning of the period. The Netflix Stock policy required 7 million new signings. This is the first time in years that Netflix has lost its own subscriber guide in successive quarters. Investors seem to agree with this unfortunate milestone, but let’s take a closer look at why Wall Street is great with Netflix’s broken glass ball.
1. This Wasn’t Q2 All Over Again
The miss from the previous quarter was one for eternity. Netflix targeted 5 million new signings in the second quarter, ultimately increasing its membership list by only 2.7 million.
A miss is, of course, a miss. However, it makes a big difference that you lost your goal by 46% in the second quarter and this time by only 3%. The nearly 6.8 million global net additions to its transmission platform are well above the 6.1 million net additions released for the same quarter a year earlier..
2. The Quality Of The Subscriber Matters
Netflix sales of $ 5.245 billion in the third quarter round off the decision that the online service provider predicted for the mid-July quarter. The same price increase at the beginning of this year, resulting in lower customer growth, also increases the amount of money Netflix collects from its members.
Membership growth has slowed and the number of subscribers has increased significantly year-on-year by 22%. However, this leads to a 9% increase in average revenue per user to reach 31% membership. top line The adjustment for the exchange rate and earnings changes is even higher.
Customers who pay more can ultimately do wonders with this scalable model, and we see Netflix operating profit more than doubling for the quarter this week. Net income of $ 665 million for the period was $ 470 million, which Netflix modeled three months ago
3. International Growth Lived Up To Its End Of The Bargain
The overall subscriber deficit came from domestic business, a segment that made a significant impact earlier this year after Netflix’s most popular plan raised $ 2 a month. Its international performance has even slightly surpassed its subscriber orientation.
This is good news as it shows that Netflix is not losing strength internationally and generating more revenue there than in the US. Since the summer of last year. Even at the United States front, the news is not terrible. Netflix is gradually increasing its membership after falling on that front in the second quarter.
4. Starting Lines Matter
Netflix Stock is not much loved in the market when it peaked in June last year. Shares peaked at one-third of their historic highs, down 21% since they announced their poorly-held second-quarter results just three months ago. A key to a successful investment is not only identifying which stocks to buy but also when they need to be bought.
Expectations on Wall Street have been watered down in recent weeks. Some analysts lowered their price targets before the profit starts on Wednesday afternoon. Even a boring report was satisfactory, and the Netflix report had much to offer as it outperformed the headlines of the subscriber shortage.
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