Netflix Beats on Earnings, But Posts Disappointing Guidance

Almost all points on the earnings print were positive, but Q1 subscriber guidance was light.
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Netflix shares alternated between small gains and small losses after-hours after the company posted revenue and earnings that beat estimates, but subscriber guidance numbers that disappointed. 

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The stock was rising 0.2% to $338.69 after hours after having fallen 0.46% in regular trading hours. 

Earnings per share came in at $1.31, beating Wall Street estimates of 52 cents, while revenue was $5.47 billion, beating analysts expectations of $5.45 billion and growing 30%. Total paid net subscribers added came in at 8.76 million, beating estimates of 7.86 million, contracting slightly year-over-year. But Netflix guided for first quarter total paid net subs adds of 7 million, below analysts' hopes of 8.88 million. 

International paid net sub adds for Q4 came in at 8.33 million, beating estimates of 7.17 million and growing 14%. U.S. subscriber adds were 420,000, missing expectations of 589,000. Netflix's total of 167 million paid subscribers was 20% higher than in January 2018. 

"Many media companies and tech giants are launching streaming services, reinforcing the major trend of the transition from linear to streaming entertainment," the company wrote in its shareholder letter. "We have a big head start in streaming and will work to build on that by focusing on the same thing we have focused on for the past 22 years - pleasing members."  

The stock underperformed the broader market in 2019, as subscriber addition expectations faded considerably in the second half of the year. Major new streaming players have recently entered the market, such as Apple  (AAPL) - Get Report with Apple TV Plus and Disney  (DIS) - Get Report with Disney Plus, with Comcast's  (CMCSA) - Get Report Peacock coming in the spring.

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