Netflix subscriber surge of 5.3 million new users sends shares soaring

Danny Woods
October 18, 2017

Revenue rose about 30 percent to $2.99 billion in the third quarter.

Netflix is expected to generate over $11 billion in revenue in 2017, according to the company's Q3 earning report.

Netflix added a record 5.3 million subscriptions in the third quarter, driven by ever-increasing take-up in internet TV devices. Over the last 90 days, insiders have sold 303,299 shares of company stock worth $54,712,558. State Of New Jersey Common Pension Fund D holds 0.22% of its portfolio in Netflix, Inc.

Netflix is benefiting from a "very powerful combination" of original programming that generates strong subscriber growth plus demonstrated pricing power, Pivotal analyst Jeffrey Wlodarczak said in a report.

Netflix ended the September quarter with 109.25 million streaming subscribers worldwide, including 52.77 million in the USA and 56.48 million in global markets.

IBD'S TAKE:Netflix stock surged above its buy range in Monday trading after the company's shares hit a buy point October 5, coming out of a cup with handle.

It said investment in originals accounted for more than 25% of its total profit-and-loss content budget in 2017 and will grow further, with US$17bn committed over the next "several years" and a spend of US$7bn to US$8bn on content planned for 2018.

Wedbush Securities analyst Michael Pachter said investors need to consider Netflix's "cringe-worthy cash burn" and growing competition.

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Scandal and Grey's Anatomy creator Shonda Rhimes left ABC to sign an exclusive production deal with Netflix in August, and the streamer made its first play in the mergers and acquisitions space when it acquired comic book writer Mark Millar's Millarworld that same month.

"Investors often ask us about continued access to content from diversified media companies".

With a total market value of $0, Netflix has price-earnings ratio of 240.73 with a one year low of $98.38 and a one year high of $204.38.

Should those figures pan out, Netflix would weigh in at a healthy 115.6 million subscribers having already seen its share price surge to $205.07 - a rise of 64% this year.

Shows like "Stranger Things", "Orange is the New Black", and "House of Cards" are some of the most popular series offered by Netflix. Rivals include Amazon.com ( AMZN ), Hulu and CBS ( CBS ) now and soon Apple (AAPL) and Disney will join the fray.

When asked about potential content cost inflation from the changing focus, Sarandos said to compare content costs to professional sports: "It gets very competitive for a handful of folks, those big unicorn shows".

Theater chains have fought against Netflix's incursion into movies, over its model of releasing films for theatrical debut the same day they're available to stream on Netflix.

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