Netflix, Inc. fell more than 10 percent in September. A number of significant digital video moves from rivals Hulu and Amazon pulled back shares. In addition, the stock could not escape the Chinese jitters that gripped the entire market.
Regardless, Netflix shares have still more than doubled in 2015. And the consensus is that last month’s dip provides an excellent buying opportunity in to an otherwise bullish story.
How bullish that story turns out to be, will be decided to a large extent, in October. So, shareholders and prospective investors watch out! October could be make or break (at least for the medium-term).
Netflix Quarterly Results
Netflix, Inc. is all set to post third-quarter earnings results after the close of trade on Wednesday, October 14. Wall Street projects quarterly profit to sink to $0.08 a share from $0.16 a share in the year ago period. That is not surprising considering the firm channeled almost its entire earnings into overseas expansion. Revenue however is projected to jump 24 percent.
Netflix is expected add 3.6 million new subscribers – 900,000 of those should come from the U.S. Both these figures would represent accelerating year-over-year growth. That’s important if Netflix is to reach its long-term target of 90 million domestic subscribers.
As has been the trend, shareholders will be treated to a letter detailing the results. This will be followed by a live Q&A session on Netflix, Inc. ‘s YouTube channel.
Netflix’s First Original Movie will be Out in October
Netflix, Inc. will unveil its first original movie, Beasts of No Nation, on October 16. The movie will also be released on the same day in select theatres.
The streaming giant has conquered the world of TV series. And the firm now hopes to change the rules of the movie business with its first film.
By venturing into original movies, “we’re continuing to try to raise the ante to get better at what we do,” CEO Reed Hastings said during last quarter’s earnings call. “I think that’s the key to continuing to hold on to our share as the whole Internet TV market grows,” he added.
Two more feature films are in the pipeline – Brad Pitt starring comedy War Machine, and a Crouching Tiger sequel. Both of these will simultaneously stream, and hit theatres, sometime next year.
Launches in Italy, Spain and Portugal
Netflix, Inc. will launch in three new countries in October– Italy, Spain and Portugal. Precise dates are yet to be announced. Second quarter was dull on the overseas expansion front. Japan happened during the third quarter. The three upcoming markets have a combined 80 million Internet users, versus Japan’s whopping 110 million.
Overseas expansion is a huge drag on earnings. Netflix has forecast mounting losses from international businesses during the current and the fourth quarter of 2015. Profits on a global basis can only be expected after the expansion phase comes to an end.