Netflix eases Wall Street worries with record quarter

Sergio Cunningham
October 17, 2018

Netflix shares shot up more than 12 percent in after-hours trading on Tuesday following the release of its favorable third-quarter earnings report.

Netflix will face stiff competition, with Walt Disney, the world's largest entertainment company, looking to launch its own on-demand services next year, as is AT&T, the parent of Warner Bros and HBO.

Netflix is behind shows such as The Crown and Orange Is The New Black.

The streaming behemoth said Tuesday that its subscriber base grew by almost 7 million in the quarter, led by the addition of 5.9 million new users overseas.

"There is so much growth ahead in streaming video entertainment, we're going to focus on that for a very long time", Chief Executive Officer Reed Hastings said during a pretaped interview with analysts.

For the current quarter, Netflix forecast it will add 1.8 million customers in the United States and 7.6 million in global markets.

Subscriber growth is paramount and in this category, Netflix didn't disappoint.

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But despite those concerns, and last quarter's subscriber wobble, Netflix shares have risen 78% this year, as consumers continue to move away from traditional media and access more content online.

Netflix's results sent shares of Alphabet Inc, Facebook Inc and Amazon.com Inc up about 1 percent higher in extended trade.

The figures covering the July to September period took the company's subscriber base to 137 million and reassured investors anxious the company was facing a slowdown in its growth surge. Revenue expanded 2.4 percent, to $4 billion. The slate included new seasons of the drama Ozark and the animated comedy BoJack Horseman, ' as well as the company's first Indian original series, Sacred Games' and Ghoul.

Netflix added 1.1 million subscribers in its domestic market, above the 674,000 additions forecast.

Jim Nail, analyst at Forrester Research, said the latest figures suggested that the second quarter result had been an "aberration, likely the results of a somewhat low volume of new content". Netflix doesn't break out its customers by market, with the exception of the U.S., though most analysts agree the UK, Brazil, Canada and Mexico rank among the company's largest.

In typical Netflix form, the company didn't provide detailed statistics about how many people watched individual titles, nor did it give hard numbers for the size of the audience for To All the Boys.

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