Here’s What We Learned From Netflix’s Q3 Earnings Report Dear Reader, The third-quarter earnings season is still in the early innings, but we did have two heavy hitters release their latest results yesterday afternoon. One company smashed it out of the park, while the other struck out.
I’m talking about Netflix, Inc. (NFLX) and Tesla, Inc. (TSLA).
In today’s Market 360, we’re going to do a deep dive into Netflix’s numbers (we’ll review Tesla’s report in tomorrow’s Market 360), and then I’ll share the new technology I now incorporate into my investment strategy to find the best stocks that are expected to move higher in just 21 days.
Let’s jump right in. Netflix Beats… Big Time For Netflix’s third quarter, the streaming giant reported earnings of $3.73 per share on revenue of $8.54 billion. This compares to earnings of $3.10 per share and revenue of $7.93 billion in the third quarter of last year, or 20.3% year-over-year earnings growth and 7.7% year-over-year revenue growth.
Analysts were calling for earnings of $3.49 per share and revenue of $8.54 billion, so the company topped earnings estimates by 6.9%. Revenue was in line with expectations. But more important for Wall Street was Netflix’s new subscriber numbers. In the third quarter, Netflix brought in 8.76 million global streaming paid net memberships, well above forecasts for 5.49 million. This represents a 4.5% year-over-year increase from the 2.41 million paid memberships in the third quarter of 2022. It also marks Netflix’s largest quarterly addition since the 10.1 million subscribers it snagged in the second quarter of 2020. Ad plan membership increased 70% from the second quarter of 2023.
Company management is also upbeat on its fourth quarter: It forecasts revenue of $8.69 billion, or 10.7% year-over-year revenue growth, and earnings of $2.15 per share. It also upped its full-year 2023 operating margin guidance to 20%, compared to previous guidance for operating margin growth between 18% and 20%.
To achieve this growth, Netflix is taking three steps: - Improving paid sharing
- Raising Prices
- Building ad revenue
Regarding pricing, Netflix is increasing its subscription prices. Company management noted: Starting [Wednesday], we’re adjusting prices in the US, UK and France. In the US, our ads ($6.99) and our Standard plans ($15.49) will stay the same, while Basic will now be $11.99 and Premium $22.99. For the UK and France, our pricing for Ads/Basic/Standard/Premium are UK £4.99/£7.99/£10.99/£17.99 and 5.99€/10.99€/ 13.49€/19.99€, respectively (like the US, our Ads and Standard plans in UK and France are unchanged). Our starting price is extremely competitive with other streamers and at $6.99 per month in the US, for example, it’s much less than the average price of a single movie ticket. The bottom line: This was a great quarter for Netflix. It’s signing up new people and cracking down on password sharing. I’ve even experienced this firsthand. I have homes in different states, and Nevada doesn’t like me having an account in Florida (though I haven’t opened a second Netflix account yet). Now, thanks to the strong subscriber numbers and new subscription pricing, shares of Netflix surged more than 16% today. This is what we want to see any time earnings come out; positive results and strong forward-looking guidance should dropkick and drive the stock higher… and that’s exactly what happened with Netflix. Know a Stock’s Next Moves with This AI System Netflix will be far from the only stock to jump over the coming weeks. Thanks to my New Intelligence – an artificial intelligence (AI) system that can predict the share price of almost any stock trading days into the future with up to 82% accuracy – I have found fundamentally superior stocks that are likely to swing to the upside in the next 21 trading days.
This New Intelligence looks at 120 different factors, updated overnight, which amounts to a billion data points at any given moment. And when it makes a mistake, it’s programmed to learn and correct for that going forward.
Essentially, the New Intelligence “teaches itself” how to accurately predict future stock prices by seeing how close it comes to its original projections… and then adjusting day by day.
If you want to learn more about the New Intelligence, click here. And time is of the essence, because just moments ago I released the name and ticker of a stock the New Intelligence believes will move higher over the next 21 days.
This recommendation may not be suitable for you, and it will require immediate action if you’re interested. Act prudently, but quickly.
Click here to find out how to access my pick now. Sincerely, |
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