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Netflix beat Wall Street forecasts by adding over 5.2 million new subscribers in the second quarter and the momentum is said continue as foreign subscriptions beat those in the US, lifting it’s stock price by 10.4%.
Shares of the tv streaming pioneer jumped $16.82 to $178.55 in after hours trading beating their all time intra day high of $166.87 on June 8.
By the end of June, Netflix recorded more subscribers abroad than in the US – 52.03 million vs. 51.92 million, for the first time. It expects that this foreign growth will bring in it’s first full year profits for the overseas market in 2017, as said in a letter to all it’s shareholders.
One of the main reasons for this rise in customers is the strong line up of TV series, such as “13 Reasons Why” and the latest season of “House of Cards”. These shows have brought in more customers than predicted for the second quarter for Netflix, when typically it’s a slow season. Wall street has expected 3.2 million new subscribers worlwide. But Netflix added 4.14 million monthly subscribers from foreign markets, much more than the average estimate of 2.59 million according to data reports. In the US, it got 1.07 million subscribers, beating the analyst’s average estimate of 631,000.
Netflix says that this second quarter momentum will continue, in the letter, but it has also been added that Netflix’s predictions have been too optimistic at certain times. Netflix is spending huge ($6 billion) every year on it’s content to get new subscribers in a quest to become the top movie and TV streaming service. It is starting to customize content for different countries and adding in more shows in multiple languages.
Netflix’s revenue rose 32.3% to $2.79 billion in the second quarter.
Netflix is pumping in more cash as it tries to buy more content to attract new subscribers. But it faces tough competition at home and abroad from video streaming providers like Amazon Inc’s Prime Video and Alphabet Inc’s YouTube. Amazon’s Prime video is making inroads into the tv streaming service with it’s wide variety of TV shows and movies and it’s huge content budget. But according to many reports, it is also being seen that there is an overlap of these services as customers seem to be subscribed both to Netflix and Prime Video. Many customers are seeing Prime Video more as a complementary service rather than a competitor to Netflix. This could be due to the affordable subscription costs and the variety of content on both the services and this is something which will continue to happen in the coming terms.
(news src: reuters.com)