Netflix Jumps On Better Than Expected Subscriber Additions
Netflix‘s stock surged 20% in after hours following its Q3 2016 earnings as net revenues, EPS, and subscriber additions came in way ahead of expectations. The company’s revenues increased 36% to $2.15 billion, beating analysts estimates of $2.13 billion. Its earnings at 12 cents a share was significantly better than the expected figure of 5 cents a share. During the quarter, Netflix added 370,000 new subscribers in the U.S. and 3.2 million internationally, surpassing its initial guidance of 300,000 and 2 million respectively. For the first nine months of the year, net subscriber additions were steady at 1.7 million, similar to the last year.
However, the figure looks more promising considering the fact that subscribers this year are moving to a higher $9.99 month subscription. The incredible success of Netflix’s original “Stranger Things” and second season of “Narcos” somewhat ensured that subscribers overlooked the price hike. The streaming service’s original content has been the backbone of its entire business and to this end, Netflix announced that it will release 1,000 hours of original content in 2017, up 67% from this year. Although the company has to spend a fortune upfront to create such content, it is the requisite spending for its business. Netflix plans to spend $6 billion on content this year, about 20% more than what it did last year.
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