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Netflix chills after blockbuster growth

by LLB Reporter
17th Oct 18 7:20 am

Netflix’s net customer growth of 6.96m comfortably exceeds previous guidance for around 5m. This takes the group’s subscription base to 137.1m, or 130.4m excluding those on free trials.

The news sent the shares up 11.5% in after-hours trading.

George Salmon, Equity Analyst at Hargreaves Lansdown:

“The old adage of build it and they will come is holding true for Netflix.

Heavy investment in content like Orange is the New Black and Ozark means free cash flow is still negative, but after a disappointing Q2 this release was all about subscriber growth. Netflix has delivered a truly box office performance, smashing previous expectations with 7m net additions.

There’s also very upbeat guidance around customer additions in the final quarter of the year, with the group’s forecast of 9.4m well above prior expectations.

Free cash flow is notably better than expected, although investors should note much of this is due to investment being shifted into Q4. Nonetheless, this is a strong set of results.  If video killed the radio star, Netflix is well on the way to taking cable’s crown.”

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