Netflix (NASDAQ: NFLX) Posts Earnings, Profit, For First Quarter

Netflix (NFLX), even in the face of some adversity, led off April with some pretty good news.

The Street is reporting that due to after-hours trading, NFLX stock increased in price by 12.78 percent to the new price of $563.22 per share. This was welcome news despite the fact that NFLX missed their earnings goal for the first quarter.

NFLX posted that trouble with currency caused the negative impact. Shares for NFLX for the first quarter posted an earning of 38 cents a share, far off the mark of the expected 69 cents a share by analysts. The analysts did expect NFLX to gain a revenue of $1.38 million, which NFLX met.

NFLX stated they have added 4.9 million new subscribers worldwide, with 2.3 million domestically. NFLX was only estimated to acquire 1.8 million new domestic subscribers. Overall, NFLX has over 44 million subscribes in 40 countries.

However, with a mix of numbers, the Street listed NFLX as a hold stock.

From the Street: “The company’s strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including premium valuation, weak operating cash flow and generally higher debt management risk.”

Bostinno is reporting NFLX’s new in-house content is a big reason for the growth in new customers, as well as retaining existing customers. NFLX CEO Reed Hastings and CFO David Wells each wrote to shareholders explaining why.

“We think strong US growth benefited from our ever-improving content, including the launch of the third season of House of Cards and new shows Unbreakable Kimmy Schmidt and Bloodline. In addition, retention continued to improve due to the growing value of our service overall.”

It is also believed that two current trends, cord-cutting and cord-shaving, are assisting NFLX continue to grow. With families looking to find less expensive forms of home entertainment, they are either cutting their cable and/or satellite services altogether (cord-cutting), or they are ordering reduced cable and/or satellite packages and using streaming services to bring in other, less expensive content (cord-shaving). Globally, subscriptions increasing are being attributed to providing service in France, Germany, and other European countries.

One possible avenue for growth is to provide service to China. In their shareholder’s letter, both Hastings and Wells talked about going into China.

“We are still exploring options — all of them modest. We’ll learn a great deal if we can successfully operate a small service in China centered on our original and other globally-licensed content.”

With security tensions between China and the US as high as they are, an American online streaming service may be too much, but both Hastings and Wells say it is being investigated.

[Image courtesy of Inside Trade]