Key points
- Netflix reported spring-quarter revenue of $9.6 billion, just meeting expectations.
- Paid users grew by 16%, adding 8 million new subscribers.
- Earnings per share rose to $4.88, a 48% increase year-over-year.
Netflix stock (Symbol: NFLX) remained flat following its spring-quarter results that failed to excite the market. The streaming giant posted revenue of $9.6 billion, reflecting a 17% year-over-year growth, aligning with analysts’ expectations of 16% annualised growth.
This lukewarm reception contrasts with the enthusiastic response to the quarterly report in December.
Picture: Netflix stock price remained flat as the revenue report failed to excite the market, as observed on the VT Markets app.
Despite adding 8 million new subscribers in the three months to June, bringing its total to 277.7 million, Netflix faces increasing competition. To stay ahead, the company has introduced more affordable service options, including an advertising-supported plan priced at $6.99 in the US, which accounted for over 45% of new sign-ups.
Earnings per share surged to $4.88, marking a solid 48% rise year-over-year, resulting in a profit of $2.15 billion. Looking forward, Netflix projects earnings of $5.15 per share for the September quarter, surpassing estimates of $4.74 by Wall Street, with anticipated revenue of $9.7 billion.
While Netflix shares have underperformed in July, down about 5%, they have climbed 37% since the start of the year.
Market analysis and forecast
The flat stock performance of Netflix following its quarterly earnings release highlights the market demand for more than just meeting expectations.
The addition of 8 million new subscribers highlights its continued dominance in the streaming industry, but the growing competition requires Netflix to innovate continually.
For short-term traders, Netflix’s current stagnation may present an opportunity to capitalise on potential volatility. With the stock down about 5% in July, any unexpected positive news or strategic initiatives could trigger a rebound. Conversely, ongoing competitive pressures and market reactions to future earnings could create short-selling opportunities.
Related content: Learn how to trade on news with simple strategies.
Looking ahead, traders should closely monitor the business strategies of Netflix to stay competitive. Its efforts to introduce cost-effective service plans and enhance its content library will be key. Additionally, the broader market reaction to its financial performance and subscriber growth will likely drive stock movements.
