Netflix Stock Surges Following Addition of Two Million Subscribers

Netflix was able to add many more subscribers than was expected during the first quarter of 2018 and posted earnings for the quarter that were in line with Wall Street expectations, while revenue just beat estimates.

The growth in subscribers sets up the company for a bright outlook for its second quarter. Earnings guidance by the company also was far above what was forecast by Wall Street and in response shares increased in afterhours trading by over 5%.

Netflix revenue for the quarter reached $3.7 billion beating estimates of $3.69 billion. Earnings per share ended the quarter at 64 cents, which was in line with estimates by Wall Street.

Net additions for streaming reached 7.41 million compared to expectations of 6.5 million. Domestic streaming new net additions reached 1.96 million compared to expectations of 1.48 million.

Net additions of international streaming customers reached 5.46 million while analysts were expecting 5.02 million.

Last January, Netflix announced that it was expecting revenue for the quarter to be $3.69 million with 63 cents in EPS and adding over 6.35 million customers.

A year ago Netflix EPS was 40 cents a share with revenue reaching $2.64 billion.

Netflix gave guidance for its EPS for the second quarter of 79 cents while analysts have estimated 65 cents.

The streaming service estimates that its second quarter revenue will reach $3.9 billion in comparison to analyst estimates of $3.98 billion.

Net new additions are expected to be 6.2 million while analysts are expecting 5.24 million.

Netflix has been relying on its growth internationally and big investments into original content to help drive new subscriptions and the results late Monday gave new insight into the effectiveness of them.

Netflix’s adding of over 7.4 million new international subscribers established a new record that marked a growth from one year ago of 50%.

Ted Sarandos the chief content officer has shot content for the service in 17 countries in an attempt to focus on local programming.

CEO Reed Hastings said that Netflix has seen success as well on the offerings it has for international mobile apps, but he added that the business had not changed the view it has on expanding into China and will continue licensing content.

Netflix is also expecting to have between $7.5 billion and $8 billion in expenses for content during 2018, which is in line with its estimates released previously.

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