Netflix (NFLX) Stock Surges After Second Quarter Earnings Report

Shares of Netflix Inc. (NFLX) were trading up +10.27 or +10.47 percent to $108.40 per share in Thursday's premarket after the company announced its second quarter results yesterday after the market close. The company reported a sharp decline in earnings but a large increase in worldwide subscribers. Netflix stock closed at $98.13, down -2.24 or -2.23 percent in Wednesday's regular trading session.

Los Gatos, California based Netflix Inc. was founded in 1997 and is an Internet subscription service offering subscribers unlimited streaming television shows and movies that can be watched on television sets, computers or on mobile devices.
The company currently operates in North and South America, the United Kingdom, the Caribbean, Scandinavia, the Netherlands, and Iceland. Netflix expanded its subscription base to over 62 million users worldwide in the company's first quarter of 2015 and added another 3.3 million subscribers in the second quarter bringing total subscribers worldwide to 65.6 million.

In the United States, Netflix added an additional 900,000 subscribers in the second quarter, bringing total U.S. subscribers to 42.3 million. The gains in new subscribers downplayed a -63 percent decline in the company's second quarter profits. The company extended itself in expanding internationally with the goal of making Netflix available all over the world by the end of 2016.

For the company's second quarter, earnings came to $26.3 million or $0.06 per share versus $71 million or $0.16 per share in the same period last year, beating the analyst consensus by $0.02 per share. Revenue for the quarter came to $1.64 billion versus $1.34 billion, an increase of +23 percent from the second quarter of 2014 and in line with analyst expectations.

Netflix announced that its negative cash flow had increased to -$229 million from -$163 million in the first quarter due in large part to the company's ongoing investment in original programming and its international exposure due to a strong U.S. Dollar. According to Netflix, almost 90 percent of subscribers have "engaged the company's original movies and television shows.

The new shows have been one of the main reasons for the jump in subscribers in the second quarter. In addition to "Sense8 , a science fiction series, Marvel's "Daredevil and a Netflix documentary, "Chef's Table , Netflix began the third season of its immensely popular "Orange is the New Black television series. The company also partnered with DreamWorks Animation to produce "Dragons: Race to the Edge which was one of Netflix most viewed originals.

Netflix has placed considerable resources backing original films that would premiere on the streaming service at the same time that the films are released in theatres. An example is a movie called "War Machine , which will be released next year and is the product of a partnership with Brad Pitt's Plan B Entertainment. Other Netflix original movies which will appear in theatres at the same time as on Netflix include Adam Sandler's "The Ridiculous Six and "Crouching Tiger, Hidden Dragon: The Green Legend .

Netflix stock began trading Wednesday reflecting a 7 for 1 stock split. This morning's gains in the stock will have it open at a new all-time high. While many analysts have given the stock "buy ratings such as Goldman Sachs and Morgan Stanley, analysts at Wedbush have stated that Netflix stock price is "a mystery to us as well and reiterated its "underperform rating with a $40 per share price target.

Other News About NFLX

Netflix supports Charter acquisition of Time Warner Cable

Netflix supports the deal because Charter said it would not charge companies to connect to its network to reach its customers.

Netflix's stock now a lot cheaper after 7-for-1 split takes effect

On an unadjusted basis, Netflix stock closed at $702.60 Wednesday and was the second highest priced stock among S&P 500 components.

Other Stocks in the News

Citigroup Profit soars as litigation costs fall

Company reported a profit of $1.51 per share versus $0.03 per share in the same period last year.

Ebay revenue jumps 7 percent in last push from PayPal

Company reported higher revenue due to higher demand for PayPal Holdings business, which it will spin off on Friday.

Published on Jul 16, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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