Netflix shares slip as spending weighs on profits

Netflix criticised for using real disaster footage in Bird Box

Netflix's original series and films, including post-apocalyptic thriller Bird Box, helped draw nearly nine million new subscribers to the streaming service in the fourth quarter.

Netflix licensed the footage of the disaster from the stock image vendor Pond 5 and used it in "Bird Box" in an early TV news montage to set up its horrific premise. Global subscriber additions were at 7.31 million, vs. 6.14 million forecast. The company said it expects to add another 8.9m new paid subs in the first quarter of 2019. The company said it generated $4.19 billion in revenue, which was just shy of Wall Street expectations for $4.21 billion.

Fueling this growth was a huge increase in paid subscribers.

The company also called out the successes of content overseas from Turkey and the United Kingdom.

Netflix is raising its USA prices by 13 percent to 18 percent, its biggest increase since the company launched its streaming service 12 years ago.

On Thursday, Netflix announced its fourth-quarter earnings, standing at $4.19 billion, falling short of a $4.21 billion estimate for the quarter, as reported by Yahoo Finance. The incredible subscription growth clearly justifies hiking membership prices in the US.

Investors may have been hoping for more after Netflix announced a price hike for USA subscribers earlier this week, usually a sign that demand is strong.

Beyond that, Netflix's growing stable of original content - along with its sizable library of licensed TV shows and movies - arguably provides the best bang for the buck among all streaming services.

Management said domestic average selling price will "improve over the course of the year" and result in revenue growth for 2019.

The company said on Thursday it would "continue to finance our working capital needs through the high-yield market" for as long its marginal after-tax cost of debt is lower than the cost of equity. The last time Netflix changed its prices was in late 2017, but this is the first time a price hike has ever hit every subscriber at once.

Netflix seems less concerned about the upcoming launch of Walt Disney's subscription service or a similar service from AT&T's WarnerMedia and more focused on the popularity of "Fortnite" the video game.

That's because worldwide growth will be a key driver for Netflix's continued dominance of the streaming video industry in the future. They maintained their "underperform" rating, and raised their 12-month price-target from $150 to $165 a share. According to Netflix, the movie is estimated to be viewed by more than 80 million households within the first four weeks of appearing on the streaming platform.

Even more detailed statistics were provided from Netflix including its USA market share of 100 million hours of viewing per day.

Related:

Comments

Latest news

Mueller says Gates' cooperation continues, a possible sign investigation isn't done yet
Gates served on the campaign past Manafort's August 2016 departure and went on to a leadership role in the inauguration. Mueller's team sought to delay sentencing for former White House National Security Adviser Michael Flynn four times.

'Super blood wolf moon' eclipse to darken skies
The Moon will start to enter the Earth's shadow just after 2:30am GMT and the maximum eclipse will occur just before 5:15am. Say hello to a lunar eclipse and a supermoon sharing the limelight high in the skies on Monday morning (January 21).

North Korea's Kim Yong-chol on way to Washington
Trump and Kim pledged at their first summit, in Singapore in June, to work towards denuclearisation "of the Korean peninsula". Bush, suggested that Trump may be so desperate for a policy "win" that he could be vulnerable to a bad deal with North Korea.

Prince Philip involved in vehicle crash near Sandringham, palace confirms
Norfolk Police were called to the scene of the collision and breathalysed both the duke and the driver of the Kia. The prince was checked by a doctor after the accident and determined to be fine, Buckingham Palace said.

Other news