Here’s why Netflix shares are off after reporting earnings – ProWellTech
Netflix Consumer Video Service Actions They are down sharply after the bell today, following the company’s third quarter earnings report.
Why is Netflix suddenly worth about 5% less than before? A mixed earnings report, a disappointing number of new paying customers, and a slightly weak lead seem to be the answer.
Entering the third quarter, Netflix told investors they should expect it will generate revenues of $ 6.33 billion, operating income of $ 1.25 billion and net income of approximately $ 954 million, worth approximately $ 2. 09 of earnings per share.
Today, Netflix posted revenue of $ 6.44 billion, operating income of $ 1.32 billion, along with $ 1.74 in earnings per share on net income of $ 790 million.
Netflix surpassed its revenue targets but failed to achieve profitability.
The company also managed to achieve the best analyst revenue expectations of $ 6.38 billion, losing analyst earnings per share expectations of $ 2.13.
In addition to the pain, Netflix also missed expectations of new customers. In its Q2 earnings, Netflix said it “expects[ed] Net additions paid of 2.5 million for Q3’20 compared to 6.8 million in the previous year quarter “, because its” strong performance in the first half has probably pushed forward some demand from the second half of the year ” .
Today Netflix only reported 2.2 million customer additions, missing its targets and clearly missing analyst expectations of around 3.3 million for the period (some analyst counts had an even higher guess).
Looking ahead, Netflix says it expects fourth quarter revenue of $ 6.57 billion, operating income of $ 885 million, $ 615 million in net income, earnings per share of $ 1.35 and $ 6. , 0 million new paid customers in the period. The road was looking for $ 6.58 billion in revenue and only $ 0.94 in profit per share, so it’s hard to analyze which part of the forecast is driving greater investor sentiment.
Regardless, today’s earnings report won’t move Netflix’s share price too far from its recent all-time highs. The company can take a profit from the loss of earnings, but nothing material.