Tatler Cox: Shares in Netflix, the US-based video streaming company, soared in Monday’s after-hours trading session after the company soundly beat analysts’ forecasts for its third quarter earnings report.
Investors chased the stock 20% higher after the company reported it had added more than 3.2 million new international subscribers in the third quarter of 2016 and 370,000 in the US, far better than the 2 million and 300,000 forecast it made in forward guidance given to investors in July. It also revealed earnings of 12 cents per share, double estimates for 6 cents a share.
The company attributed the strong performance to a raft of new, original programming including old favorites like “House of Cards”, starring Oscar-winning actor, Kevin Spacey and “Orange is the New Black”. New shows included original productions of Marvel’s “Luke Cage”, “Stranger Things” and crime thriller, “Narcos” all of which have drawn critical acclaim.
“We’re extremely impressed with the way Netflix has rebuffed naysayers who’ve bet heavily against the company in anticipation of its being unable to crack international markets in which English isn’t the first language,” said John Oakshott, who leads technology research at Tatler-Cox.
“They’ve doubled down on offering content local to the markets in which they operate while ensuring that subtitles are available in non-English speaking markets.”
Despite the earnings surprise, the company said its plan to increase original programming to 1,000 hours in 2017 would almost certainly impact upon profitability.
Tatler-Cox said that while the results were spectacular, it remains to be seen how the company can maintain the current momentum with production costs continuing to mount. It has a neutral rating on NFLX.

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