Netflix Pops on Earnings Beat

[MongiIG]

NETFLIX EARNINGS KEY POINTS:

• Netflix reported better-than-expected bottom-line results on Tuesday
• Third-quarter EPS stood at $3.10 versus a forecast of $2.12. Revenue came in at $7.93 billion, slightly below expectations of $7.98 billion

 

Netflix soared in the extended session after announcing strong quarterly numbers and offering constructive forward-looking projections. At the time of writing, NFXL shares were up about 15% to $278.00 after a tepid performance during regular trading hours.

According to Tuesday’s financial disclosure, third-quarter revenue stood at $7.93 billion, slightly below analysts' estimates of $7.98 billion, representing a 5.9% increase compared to the same period last year. With this result, normalized EPS clocked in at $3.10, blowing past expectations of a gain of $2.11 per share.

In terms of membership growth, management said that 2.41 million subscribers were brought onboard, beating the forecast of 1.0 million and reversing all losses during the first half of the year. In addition, the streamer said it expects to add 4.5 million paying users for the last three months of the year, slightly above estimates of 3.9 million.

NETFLIX RESULTS AT A GLANCE

Normalized EPS: $3.10 vs. $2.12 per share expected, according to Bloomberg

Revenue: $7.93 billion vs. $7.98 billion expected, according to Bloomberg

Global Paid Net Subscribers: 2.41 million new subscribers vs. expectations of a gain of 1 million

 

NETFLIX (NFLX) 5-MINUTE CHART

Netflix Chart Prepared Using TradingView

While the results were largely positive, investors placed less importance on past performance and chose to focus on profitability. In this regard, Netflix said the worst of the slowdown is over and that it is on a path to reaccelerate growth, but noted that the upcoming ad-supported tier will not have a material contribution to fourth-quarter performance (results may take longer to play out).

The release of Netflix's earnings follows a somewhat positive day on Wall Street. Stocks surged at the cash open, but retraced some of their advance throughout the day on cautious sentiment and unconfirmed reports that Apple will cut iPhone 14 production amid weak consumer demand. After all the twists and turns in the day, the S&P 500 climbed 1.14%% to 3,719, while the Nasdaq 100 edged up 0.77% to 11,147.

 

 

Oct 18, 2022 | DailyFX
Diego Colman, Strategist