Sales, profits surge at Netflix

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Subscriber growth has always been more important to investor perceptions of Netflix than its relatively small profits.

Netflix last night reported a strong jump in profits and better-than-expected growth in users in the past quarter, sparking a rally in shares of the streaming television market leader. Netflix, Inc. has a 52-week low of $178.38 and a 52-week high of $423.21.

Netflix is making the investors smile after a report from its last quarter earnings revealed that the world's largest paid online TV network is growing faster than analysts had predicted. The stock has a market cap of $162.92 billion, a P/E ratio of 277.12, a price-to-earnings-growth ratio of 4.67 and a beta of 0.89.

India strategy was a key talking point in the earnings interview; Netflix sees meaningful growth runway within the Indian marketplace at current price-points as well.

"After handily blowing away Street expectations on subs in the last few years, this is a clear speed bump for Netflix as the global miss was most concerning, given this is the linchpin to the core growth thesis for the coming years", GBH Insights technology analyst Daniel Ives said at the time, suggesting a "speed bump" rather than the start of a negative trend. Imperial Capital cut their price objective on Netflix from $503.00 to $494.00 and set an "outperform" rating for the company in a research report on Monday, August 13th.

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Popular returning series like "Marvel's Luke Cage" and an influx of new worldwide content helped Netflix smash Wall Street's third-quarter earnings and subscriber growth expectations. 313.87 million shares or 4.72% less from 329.43 million shares in 2018Q1 were reported. The business's revenue was up 34.0% compared to the same quarter previous year. In that context, Netflix's partnerships with Airtel, Hathway Broadband, Tata Sky etc can perhaps be viewed as guideposts on how it aims to drive growth beyond the already well-acquainted target base in India. Even before the surge that started with Tuesday's after-hours trading, the shares were up 80 percent this year. Netflix doesn't break out its users by market, with the exception of the US, though most analysts agree that the U.K., Brazil, Canada and Mexico rank among the company's largest.

Analysts from USA financial group Keybanc downgraded their rating on Netflix to "sector weight" from "overweight", questioning whether the company was capable of improving investment returns and margins in years to come. The business had revenue of $3.91 billion for the quarter, compared to analysts' expectations of $3.94 billion.

This quarter, the company expects to sign up 9.4 million new subscribers globally, far above the 7.18 million average of forecasts compiled by Bloomberg.

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