Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Netflix Earnings Miss in Q3 as Subscriber Adds Fall Short; Shares Slump

Stock MarketsOct 20, 2020 04:49PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Netflix Earnings Miss, Revenue Beats In Q3

By Yasin Ebrahim

Investing.com - Netflix (NASDAQ:NFLX) reported on Tuesday third quarter earnings missed Wall Street estimates as subscriber growth fell short after pandemic-led demand seen earlier in the year faded.

Netflix (NASDAQ:NFLX) fell 5%.

Netflix announced earnings per share of $1.74 on revenue of $6.44 billion. Analysts polled by Investing.com anticipated EPS of $2.13 on revenue of $6.39 billion.

Subscriber numbers grew by 2.2 million during the three months that ended September 30, below its guidance of 2.5 million net adds.

"As we expected, growth has slowed with 2.2m paid net adds in Q3 vs. 6.8m in Q3’19. We think this is primarily due to our record first half results and the pull-forward effect we described in our April and July letters. In the first nine months of 2020, we added 28.1m paid memberships, which exceeds the 27.8m that we added for all of 2019," the company said.

Netflix's aggressive spending on content has placed increased scrutiny on its cash burn, but the company upgraded its outlook on cash generation following improved third-straight quarter.

Cash generated by operating activities in Q3 was $1.3 billion, compared with a decline of $502 million in the prior year period. Free cash flow, meanwhile, was positive for a third consecutive quarter following an increase of $1.1 billion, compared with a decline of $551 million in Q3 2019. Free cash generation was $2.2 billion year-to-date, a sharp contrast from the $1.6 billion decline seen in the first nine months of 2019.

"As productions increasingly restart, we expect Q4’20 FCF to be slightly negative and therefore, for the full year 2020, we forecast FCF to be approximately $2 billion, up from our prior expectation of break-even to positive," the company said.

Looking ahead to the final quarter, Netflix forecast 6.0 million paid net adds, down from 8.8 million the prior year. The streaming giant also acknowledged increased competition after Walt Disney Company (NYSE:DIS)restructured operations to focus more on its streaming business.

"Disney’s recent management reorganization signals that it is embracing the shift to streaming entertainment. We’re thrilled to be competing with Disney and a growing number of other 5 players to entertain people; both consumers and content creators will benefit from our mutual desire to bring the best stories to audiences all over the world," Netflix said.

Netflix is up more than 53% for the year so far, but will likely see near-term pressure, experts said.

"Netflix net additions clearly show that the pandemic-induced boom is tapering off and it will be hard for the company to repeat a similar or better performance next year. In that scenario, there is no reason for its stock to continue its upward journey in the short-run. That said, Netflix continues to remain the dominant player in the streaming business and further strengthening its lead during the pandemic," Investing.com analyst Haris Anwar said.

Stay up-to-date on all of the upcoming earnings reports by visiting Investing.com's earnings calendar

Netflix Earnings Miss in Q3 as Subscriber Adds Fall Short; Shares Slump
 

Related Articles

Walgreens Boots Alliance Offers Major Upside
Walgreens Boots Alliance Offers Major Upside By StockNews - May 11, 2021

Walgreens Boots Alliance (NASDAQ:WBA) is attractive from a value and growth perspective. While the stock has lagged the market over the past few years, WBA has increased its market...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
Jesse Henry
Jesse Henry Oct 20, 2020 7:41PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
well knowing that they are willing to showing young girls for a profit I understand why subscribers have dropped.
Fabio falec
falec Oct 20, 2020 7:37PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
What's confusing here? EPS released today and below forecast. Already falling after-hours by 5+%. Full lockdown do not last forever. And more to come!
Jack Galloway
Jack Galloway Oct 20, 2020 5:24PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Wang
Pallash Nayak
Pallash Nayak Oct 20, 2020 4:22PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Bit confusing it will go up or again will go down??
Plopseven Schwartz
Plopseven Schwartz Oct 20, 2020 4:22PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It’s so inflated right now.
Venkat Sadasivam
Venkat Sadasivam Oct 20, 2020 4:22PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Most news are fake or half truth so do your own analysis to find whether it will go up or down .
Fabio falec
falec Oct 20, 2020 4:22PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Man, they are facts, earnings have been released. EPS below forecast!
Pallash Nayak
Pallash Nayak Oct 20, 2020 4:21PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Bit confusing it will go up or again will go down??
David Canann
David Canann Oct 20, 2020 4:21PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yes... yes it will.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email