Netflix Beats

Netflix NFLX 380.60 +9.20 +2.48% reported 3rd Quarter earnings of $1.47 per share on revenue of $5.2 billion. The consensus earnings estimate was $1.05 per share on revenue of $5.3 billion. Revenue grew 31.1% on a year-over-year basis. Crushed on earnings, missed on revenue and guided lower. But I think the mood of the street was they were going to miss on all sides, and guide even lower than they did… trading was/is positive on the stock. Although not as high as it was near the open… stock hit almost 309 today.

What to Expect

According to the shareholder letter: The company expects fourth quarter earnings of approximately $0.51 per share on revenue of approximately $5.442 billion. The current consensus earnings estimate is $0.84 per share on revenue of $5.52 billion.

The world of streaming is getting more and more crowded every day. Hulu, Youtube, alllll the individual pay channels (HBO, Showtime, etc.). Disney getting into it and using some big pricing powers along with bundles that include sports and Hulu. Don’t forget Amazon Prime whose content had a strong showing at the Emmys. Plus all the cable cutting subscription services… Sling, Fubo, AT&T Watch. So many options! Keeping up with the content is costing Netflix quite a bit. They do have the luxury of being first to market but how long will that last?

I’m pretty surprised the market has reacted as favorably as it has, 114 PE and growth of 31.1% doesn’t leave a lot of room for mistakes. But they ARE growing at over 30% year over year for now, not too many companies this big can say that. I’ve thought Netflix’s run had come to an end in the past and been sorely mistaken. I do not currently own a position or plan to own a position anytime soon.