Netflix: Why Are Investors Hitting the Pause Button?
Netflix (NASDAQ:NFLX) recently announced better-than-expected results for the third quarter, but shares are hitting the pause button as the company’s chief executive officer warns investors about irrational exuberance.
Net income for the three months ended September 30 totaled $32 million (52 cents per share), compared to only $8 million (13 cents per share) a year earlier. Meanwhile, revenue surged 22 percent, from $905 million to $1.1 billion. On average, Wall Street expected earnings of 47 cents per share.
In the United States, Netflix now has more subscribers than Time Warner’s (NYSE:TWX) HBO. “We are very pleased to have over 40 million members, up from less than 30 million just one year ago,” said Reed Hastings, Netflix’s CEO, in a letter to shareholders. “The Netflix original series Orange is the New Black is a critical and popular success, and our earlier series House of Cards is the first Internet TV series to win a Primetime Emmy Award. We launched our 41st country and the Dutch seem to like Netflix.”
Netflix has about 31 million members in the U.S., while HBO has nearly 29 million.