This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

3 Takeaways From Netflix's Second Quarter

NEW YORK ( TheStreet) -- Netflix  (NFLX - Get Report) reported its second quarter and judging by trading volatility, with moves within a tight range, investors aren't quite sure what to make of it.

On the one hand, the online streaming giants boasted a total membership base 33% larger than a year earlier, far exceeding its own estimates.

On the other, earnings missed estimates. Earnings of $1.15 a share fell shy of forecasts by a penny, according to Thomson Reuters estimates, while revenue of $1.34 billion was in-line with expectations.

To be fair, analysts had high hopes for a quarter which saw more than 30 Emmy nominations, the launch of season two of critically-acclaimed Orange is the New Black, and expansion into all corners of Europe. Netflix's progress is none so clear than when comparing to a year earlier -- earnings came in more than double and revenue climbed 25.2%, while total subscriptions surpassed the 50-million-mark for the first time, including more than 36 million domestic streaming subscribers.

TheStreet's Keris Lahiff has details on Neflix's quarterly results:

WATCH: More tech videos on TheStreet TV | More videos from Keris Alison Lahiff

"The business part is really simply; it's to continue to drive subscriber growth and pull the levers of content and marketing. As long as they keep growing subscribers, the margins keep expanding, investors are mostly comfortable," S&P Capital IQ senior analyst Tuna Amobi told TheStreet.

Threats on Content and Distribution

Though Time Warner (TWX) has knocked back an offer from 21st Century Fox (FOXA), the consolidation of the two content production powerhouses may have an effect on Netflix's bargaining power. Netflix management, however, remain unfazed.

"It's very hard to corner the market on creativity and ideas," Netflix chief content officer Ted Sarandos said on a post-earnings conference call. "I don't see how it would affect things too dramatically in the early days."

"We'll take it as it comes," added CEO Reed Hastings. "The more we're working directly with producers, the less vulnerable we are to aggregation in the big content suppliers."

"For them more risk would be on the consolidation of distributors as opposed to content players," Amobi said of the Time Warner/Fox threat. "Netflix is moving towards original programming in their own right. That's going to mitigate that risk as long as they stay successful."

The company remains more concerned with the net neutrality debate, a topic on which Netflix has already gone on record with the Federal Communications Commission.

"Our focus on strong net neutrality, including interconnection, is about preventing large ISPs (Internet service providers) from holding our joint customers hostage with poor performance to extract payments from us," the company said in a statement, urging the FCC to block the Comcast (CMCSA - Get Report)/Time Warner Cable (TWX) merger or to at least prevent them from charging for interconnection.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CMCSA $60.76 0.00%
NFLX $90.03 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs