Netflix's first-quarter subscriber additions misses estimates

  • Netflix's first-quarter subscriber additions misses estimates

Netflix's first-quarter subscriber additions misses estimates

The firm said its House of Cards series, which last year debuted in the first quarter but for this year has been pushed into the second quarter, was the main reason for the lower-than-expected subscriber growth.

As the subscriber churn and acquisition gyrations following the price hikes more distant in the rear view mirror, we expect the narrative around NFLX shares to now settle down to a more iterative blocking and tackling of increasing the value proposition for its global subscriber base with a greater amount of local language content as well as the ongoing decrease to transactional/payment/sign-up friction for worldwide.

Alan Gould of Rosenblatt Securities reiterates a Neutral rating on the shares, writing that despite some hard comparisons to a year ago, "given the company has beat in 11 of the past 13 quarters and that first quarter guidance assumed the strong 4Q-16 pulled forward some net adds from 1Q-17, we would not be surprised with a first quarter beat".

While touting the milestone on an earnings call Monday, Netflix CEO Reed Hastings stressed that services like YouTube and Facebook each have a billion or more users. The firm earned $2.64 billion during the quarter, compared to analyst estimates of $2.64 billion.

Netflix's investment in original programming has inspired competing technology companies and TV networks up their spending, creating more competition for attention and eyeballs. (NASDAQ:AFAM) is under coverage by number of analysts. Unlike with Apple's (AAPL) iPhone sales numbers, there is a good baseline for whether Netflix meets or beats expectations here.

Netflix added a total of 4.95 million subscribers - 1.42 million domestic (U.S.) and 3.53 million worldwide subscribers -which fell short expectations for total net add of 5.13 million subscribers.

Given the rise in the stock ahead of the report, the market is expecting a little more pop above guidance, probably combined with solid, if not strong guidance. As a result, though the stock suffered a setback immediately in extended hours trading, it recovered later to gain 1.43 percent. In other words, the Wall Street consensus has more than doubled in the last 3 months.

"Additionally, investors ask us about Amazon's move into NFL football", Hastings wrote. Netflix, Inc.'s stock price now sits at $147.25. That said, the days of racking up big global contribution losses have clearly ended.

With Netflix set to sign up its 100 millionth subscriber worldwide this coming weekend, the service is looking toward the future.

What's the plan for investors? Based on the trend, we could see the global base surpass domestic users by the second quarter. While some analysts have a High Price target for the stock of $178 and a Low Price Target of $68.

According to Netflix they have experienced a net increase of 4.95 million subscribers.

The worldwide market is taking a liking to Netflix. Eventually all tech companies plateau.

Betting on more disruption and growth looks like the better bet. We are in no rush to push margins up too quickly, as we want to ensure we are investing aggressively enough to continue to lead internet TV around the world.

The Los Gatos, California company now has a market value of about $63 billion.

But that is a long-term game, so keeping the powder dry until after the earnings report makes sense.