Netflix Reports Mixed Earnings: What Investors Are Weighing

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Netflix  (NFLX) - Get Report shares were largely flat after the streaming giant reported first quarter earnings rat missed estimates, but is showing strong subscriber growth trends, as people stay at home and sign up for Netflix. 

The stock was largely unchanged at $435 a share in after hours trading after initially gaining as much as 10%. 

Here were the results

  • Revenue: $5.77 billion v. analysts estimates of $5.75B
  • Paid net global subscriber additions: 15.7 million v. 8.2 million 
  • EPS: $1.57 v. $1.64 (GAAP). 

Management said currency headwinds got in the way of a better revenue beat, even as subscriber growth blew estimates out of the water, which analysts had anticipated. The profit figure missed estimates as Netflix didn’t fulfill its operating margin goal of 18%. The result came in at 16.6% because of added production costs to the tune of $218 million. 

Guidance for the second quarter was fairly upbeat, with management looking for paid net subscriber adds globally of 7.5 million, versus analyst estimates of 4.1 million. Revenue is expected at just $6 billion compared with Wall Street expectations of $5.98 billion because of the currency headwinds, management said. 

Still, management said it is well on the way to solving its production issues and forecasts GAAP EPS in the quarter of $1.81 against estimates of $1.55. 

The stock ran up 35% into the earnings print, as investors weigh a solid subscriber outlook against a seemingly one-time cost issue and currency headwinds hurting revenue. 

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