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Netflix record subscriber growth wall Street worries



(Reuters) – Netflix Inc. hooked up 7 million new streaming subscribers from July to September, more than Wall Street had expected, reassuring investors who were worried the company was facing a slowdown in its fast-paced growth.

Netflix's customer base of 137 million worldwide, confirms its rank as the world's largest online subscription video service.

Netflix shares, already up about 78 percent so far this year, jumped 14 percent to $ 394.25 in after-hours trading, and boosted other high-tech stocks.

The investors in Netflix shares tumbling 14 percent after it missed Wall Street's subscriber growth targets.

"The question at the end of Q2 what did that miss was aberration or signs of a longer-term slowdown in the business," said Forrester Research analyst Jim Nail.

Netflix's results are shares of Alphabet Inc, Inc Facebook and Amazon Inc Increase of 1

percent higher in extended trade. FANG group of high-growth companies has recently lost some of its momentum following market-leading gains in recent years.

HIGH CONFIDENCE

Netflix is ​​investing more than $ 8 billion in programming this year. In the third quarter, it releases its largest slate of original television shows and movies to date, including new seasons of hits such as "Orange is the New Black" and "BoJack Horseman."

That paid off in terms of new subscribers , Wall Street analysts had expected Netflix to add about 5.2 million streaming customers in the quarter.

The Company Exceeded Forecasts in Both U.S. and international markets. Netflix said it was signed up approximately 1.1 million subscribers in the United States, above analysts' estimate of 674,000, according to Refinitiv. Its international business added nearly 5.9 million subscribers, compared with the average analyst estimate of 4.5 million.

In a letter to shareholders, Netflix said it saw "strong growth across all of our markets including Asia."

Executives said audiences welcome to India, which is the "Sacred Games" identified as key to its expansion.

"Greg Peters, chief product officer, said in a post-earnings video interview," we feel like we have a long, long runway ahead of us in India.

For the current quarter, Netflix forecasts it will add 1.8 million customers in the United States and 7.6 million in international markets.

"We want to assure investors that we have the same high confidence in the underlying economics as our cash investments in the past," Netflix said in his letter.

COMPETITION

During the September quarter, Netflix added about 676 hours of original programming in the United States, according to Cowen and Co analysts.

Netflix has been borrowing heavily to fund rapid growth in TV shows and movies. It has issued a net of $ 7.5 billion in less than three years, though that could carry a cost in a changing economic environment.

"Rising interest rates could make Netflix increasingly vulnerable to higher cost of capital," CFRA research analyst Tuna Amobi said.

At the same time, Netflix faces competition from deep-pocketed companies looking for Walt Disney Co and AT & T Inc that are expected late next year.

Netflix said it will expects operating margins at the lower end of the 10 percent to 11 percent range for the full year of 2018. It will cut its projection of negative cash flow to closer to $ 3 billion. The company had previously projected $ 3 billion to minus $ 4 billion.

Neil Begley, a senior analyst at Moody's Investors Service, estimated that Netflix may spend more than $ 9 billion on this year, but he said the total cost of the investment would be $ 3 billion.

"It's probably still the case that they're going to stick to raising debt twice a year," he said.

Netflix's net income rose to $ 402.8 million, or 89 cents per share, in the third quarter ended Sept. 30, up from $ 129.6 million, or 29 cents per share, a year earlier. That beat analysts' average estimate of 68 cents, according to Refinitiv.

Total revenue rose to $ 4 billion, in line with analysts' expectations, from $ 2.98 billion a year earlier.

FILE PHOTO: The Netflix is ​​pictured on a television at this illustration photographer taken in Encinitas, California, US, January 18, 2017. REUTERS / Mike Blake / File Photo

Reporting by Vibhuti Sharma in Bengaluru, Lisa Richwine in Los Angeles; Additional reporting by Kate Duguid in New York; edited by Peter Henderson, Bill Rigby and Leslie Adler

Our Standards: The Thomson Reuters Trust Principles.

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