Published: Wed, October 17, 2018
Finance | By Kristine Clayton

Netflix adds seven million subscribers over summer after spring stumble

Netflix adds seven million subscribers over summer after spring stumble

Netflix posted Tuesday third-quarter earnings and subscriber growth that topped expectations. Sales grew 34 percent to $4 billion, meeting Wall Street forecasts.

But the Netflix cash burn, as it's called on the Street, is a worthy issue for investors to monitor as it's starting to change the complexion of the company's financials. Analysts say that even if Netflix does reach its targeted 5 million new subscribers for Q3, Netflix investors can still expect more conservative growth moving forward.

Netflix earned $403m on revenue of $4bn in the quarter. The last three months of the year bring new movies from top-tier filmmakers, including the Coen brothers, Paul Greengrass and Gravity director Alfonso Cuarón, on whose Roma Netflix is pinning Oscar hopes.

As suggested by analysts in a Yahoo Finance report, Netflix is quietly gaining its foothold in the Indian market.

Better-than-expected growth in the third quarter will keep that narrative alive, while another miss will probably prompt a major sell-off. Netflix first signed a carrier billing in India with Vodafone past year; postpaid customers could pay for Netflix on their monthly bills.

In a letter to shareholders, Netflix said, "We saw strong growth broadly across all our markets including Asia".

Among the new shows released last quarter, "Sacred Games" stands out. Netflix released 14 original rom-coms in 2018, six of which came during the popular "Summer of Love".

"After handily blowing away Street expectations on subs in the last few years, this is a clear speed bump for Netflix as the global miss was most concerning, given this is the linchpin to the core growth thesis for the coming years", GBH Insights technology analyst Daniel Ives said at the time, suggesting a "speed bump" rather than the start of a negative trend.

Netflix reported 1.09 million domestic subscriber additions, surpassing estimates of 673,800.

Overall, Wall Street continues to be enamored with the streaming service.

Q3 is also thought to have seen more people flock back to the platform thanks to new seasons of its most popular shows. Disney and AT&T Inc, the parent of Warner Bros. and HBO, are each looking to introduce new services next year - after completing takeovers of other companies worth a combined $160 billion. The company said Tuesday that it was already in production of "the next set of original rom-coms" for its members. But investors may wonder where the money is going if Netflix misses again.

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