Netflix shares dip as Q4 revenue misses estimates
- Author: Kyle Peterson Jan 20, 2019,
Jan 20, 2019, 1:04
Shares of the company fell as much as 4.6 percent to $336.73 in early trading and were on track for its worst day in 2019.
Q4 total paid subscriber growth (paid net additions): 8.8 million, versus Wall Street estimates 7.6 million and Netflix forecast 7.6 million. The company projects it will add 8.9 million subscribers worldwide at the end of the first quarter.
However, a price increase in the USA and some countries in Latin America and the Caribbean announced this week has the potential to add some $1bn in revenue.
"As Netflix subscriber adds continue to exceed expectations and it approaches an inflection point in cash profitability, we believe shares of NFLX will continue to significantly outperform".
"(The company) still only accounts for perhaps 10 percent of all TV viewing hours in the U.S. This is growth defined, in our view".
Netflix expects earnings per share of 56 cents on revenue of $4.49 billion, compared with Wall Street consensus estimates of 82 cents and $4.61 billion.
Many analysts cited the company's most recent price hike, announced earlier this week, as a reason to stay bullish on the company and its growth potential.
Morin said she spoke with a Netflix representative today and asked the company to review its catalogue and remove the images.
"Investors were hoping for a robust outlook after the video streaming pioneer, which boasts of popular shows such as "The Crown" and Black Mirror", raised prices for most US subscribers earlier this week.
After streaming giant Netflix came under fire for including footage of a real-life, deadly incident that occurred in Canada in its breakout monster movie Bird Box, the company said yesterday it will not pull that imagery from the film.
Netflix says the funds from the increased pricing will be used for its original content and further accelerate revenue and overall growth.
Netflix is expected to spend up to $13 billion on new TV shows and movies to satisfy its massive user base.
Wedbush has one of the most bearish outlooks on Netflix of any Wall Street shop.
As the following chart shows, this week's change marks the fourth price hike to Netflix's standard plan in nine years.
Concerns about the stiffening competition and Netflix's ability to sustain its current leadership in video streaming has caused the company's stock price to slide by 21 percent from its peak of $423.21 reached last June. "I don't know if this is happening all the time, but we are looking for assurances from Netflix that... they are going to remove them", Morin said in an interview, Canada's The Globe and Mail reported.
The horror film Bird Box, starring Sandra Bullock, began streaming in late December and was viewed by 45 million subscribers.