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NFLX Goes Full Amazon: Burns Record Amount Of Cash But Stock Surges On Jump In International Subscribers
The Amazon model of burning countless amounts of cash in hopes of one day reaching profitability has fully arrived at Netflix, which moments ago reported earnings of $0.38 missing consensus expectations of $0.63 wildly on soaring expenses, and yet the stock is soaring.
Of course, in keeping with the New Paranormal tradition, NFLX did decide to double its bottom line EPS using pro forma addbacks, and for some incomprehensible reason added back FX impact to its bottom line:
Our strong performance led to overall operating income that exceeded our projections ($97m actual versus $79m forecast). Net income was negatively affected by currency-related transaction losses included in other expense; excluding these forex losses, Q1 EPS would have been $0.77 vs. our $0.60
forecast and our actual EPS of $0.38.
... which at $33.7 million was nearly 150% greater than the actual earnings, resulting in a non-GAAP EPS of $0.77.
However, the reason why the stock is up more than 10% in the aftermarket is because subscriber additions jumped more than expected, with 2.283 million domestic subs added and 2.6 million international, well above the 2.28 million expected, and as a result the foreign subscribers are now half of the domestic, and up 100% from December 2013.
This is what Reed Hasting had to say about the subscriber growth:
During Q1, higher-than-forecast net adds and US revenue, coupled with lower-than-forecast content spending, resulted in a US contribution margin of 31.7%, ahead of our 30.1% estimate. In 2015, we expect to run ahead of our US contribution margin growth target of 200 bps/year on average because a greater share of global and original content costs will be absorbed by existing and new international territories as we continue to expand globally (since we allocate global content costs by geography).
In addition, starting in Q2 we intend to shift some of our US marketing budget to international to take advantage of the substantial available growth opportunities. This, in the short term, drives down international contribution profits and drives up US contribution profits. We are still targeting 40% contribution margin in the US in 2020.
Our international segment was fueled by continued strong growth across our 50+ countries as well as a successful March 24 launch in Australia and New Zealand, which adds about 8 million broadband households to our addressable market. In ANZ, Netflix benefited from high consumer awareness, a fervent fan base for original series like House of Cards and Orange Is The New Black and operator relationships with Optus and iiNet, the second and third largest broadband providers. We expect international Q2 net adds of 1.90 million, up 70% vs. last year. Later in 2015, we will launch additional markets, starting with Japan.
Where does NFLX think subs are going: it expects to add 600K in the US and another 1.9mm abroad, making foreign growth the primary driver for the company's valuation.
As for the here and now, and the one metric that use to matter once upon a time but no longer matters, cash flow, NetFlix just reported its worst cash burning quarter in history, blowing through $126 million in the quarter.
In other words, more dilutive convertible and/or stock issues are imminent which will promptly be taken by the euphoric shareholder base as bullish catalyst and send the stock to even more stratospheric valuations.
And the reaction in the stock...
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C.E.O. Reed Hastings Jr. said last year that the stock was way overvalued.
When the C.E.O. says that on CNBC you should listen.
Love Netflix but they are in volume vs. profitability mode.
CALPERS probably buying it hand-over-fist.
one way market.......up only. watta joke...as long as they can burn the shorts they'll keep pumpin it
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
revenue comes in exactly as expected, eps misses big time, q2 outlook negative, and the fucking stawk is up 13 percent?
i guess that is expected in todays ''stawk market''
Netflix ... exporting the stupidity of amurikan cinema around the globe !
Strong buy, bitchez !!
Rumor has it NFLX is gonna buy out the $100 million dollar-4 truck Grilled Cheese company.
They liked their numbers.
pods
can Daredevil save Netflix?
He can't watch Netflix programming so I don't think so.
It initially ripped downards.. And then pulled the same shite Amazon does; V shaped recovery. I think it was on the bit of news that they are going to recco a stock split.. It will thus now be even more available to Johnny Muppet.. So more greaterer fools.. To the moon.
WWJCD = What Would Jim Cramer Do?
Marry the manager of his Brooklyn Mexican restaurant ?
http://www.businessinsider.com/jim-cramer-getting-married-2015-4
Imagine all the subscriber adds there would be with a good selection of movies.
NFLX selections stinks. Hard to beleive they're doing this well.
Actually, in their defense, and I am not defending the valuation. We stream some and since we have not watched TV for years, the content is not bad for us. And, no commercials.
But I would feel better buying shares of NFLX at around $35.00 per share.
Are my eyes fucked or did all that happen on almost no volume. Either way, sell your silver and buy the top.
No, that is how it works these days with the banks in charge of pricing everything. There is no market interaction. Price is chosen by the banks. That way the banks are able to ensure that the money they create out of thin air and give to their cronies returns a profit for everyone they need to control. It cannot fail as long as they have absolute control on price.
Seems wrong, but those who benefit will now complain.
NFLX earned .38 cents this quarter vs. .86 cents last. Consensus was .63 cents.
Next quarter they estimate to earn .26 cents, that is 1/4 of One Dollar.....And the stock is now trading at $536.00. We are close to beating the valuations of 1999. Beyond words all, just insanity.
Just bot some at 532, don't miss the train suckers...wooo hooo!!
Perfect Squid, just perfect.
WHAT DIFFERENCE DOES IT MAKE? Cash that is. That is so last decade.
Reed Hastings cashed out $55M in 2015. NFLX didn't even earn that on a non-GAAP basis. This is a control fraud. Nothing more.
Sure seems like it. Hastings is well rewarded for his complicity. He could do nothing without the guidance of the banks/underwriters, who seem to actually be running the show.
So, they are saying that roughly 40% of all US households have paying Netflix accounts. Huh ... one would not know it from the people I associate with. Guess that we are just too poor.
Then again, the market is all lies. It will be interesting to see what happens with the other government/banker darlings such as LNKD and FB when they report. I am sure they will have a similar story ... accounts up, especially internationally, losing money on a GAAP basis, but on a non-GAAP adjusted EBITDA basis they will have (with the help of their banking advisors) once again exceeded expectations and the stocks will jump the usual 10 to 15 percent. To do anything else might shake people's faith.
Read here the analysis of NFLX stock valuation:
http://prudentvalueinvestor.blogspot.com/2015/04/sell-short-netflix-nflx...