Netflix adds more subscribers than thought

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Some have begun to question, however, whether Netflix's business model is as durable as the share price action suggests, given the huge investments the company has begun to make in its own content, and burgeoning competition.

After a stumble with its previous results, the world's largest paid online TV network added far more subscribers than analysts expected in the third quarter. Netflix signed up 6.96 million customers in the quarter, according to a statement on Tuesday (Oct 16), boosting its global total to 137.1 million.

On Tuesday, Netflix reported third-quarter earnings of 89 cents per share versus the 68 cents FactSet Street estimate. During that quarter, Netflix had a dearth of new programming that resonated with viewers the way hits like House of Cards and Stranger Things had done in the past. "This year, Netflix originals led with 112 Emmy nominations spanning 40 of our shows", it added. The company anticipates adding another 9.4 million subscribers during the fourth quarter, up 13% compared with the 8.3 million it added a year ago. Said eMarketer media analyst Paul Verna. 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. Netflix also bundled its Basic subscription plan to postpaid customers who spent more than Rs 1,299 per month.

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. Analysts were looking for $0.68 a share. And even USA growth supposedly remains strong, despite fears of a stagnating market.

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"Our broad slate of original programming helped drive a solid quarter of growth", Netflix said in a letter to shareholders. The after-hours jump, to $346 per share, means the stock price has climbed almost 70 percent since the beginning of the year. Sales grew 34 percent to $4 billion, meeting Wall Street forecasts. "That's a really good number for a market that's this mature".

On October 10, WarnerMedia announced it is entering into the streaming game with a direct-to-consumer streaming service set to launch at the end of next year.

Expects to get more granularity on the company's 2019 expense plans by line item next quarter, while the company will see easier expense comparisons in 2019 given the push toward self-produced content and content-specific marketing ramp-up in 2018.

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