Netflix stock dips despite beating third-quarter expectations

Streaming firm's fourth-quarter forecast underwhelms

Netflix stock dipped by as much as 3.4% on Wednesday, despite beating third-quarter expectations.

The streaming giant said it added 4.38 million new subscribers in the three months to the end of September, 880,000 more than the company’s own forecast and 600,000 more than predicted by analysts. 

The California-based company’s total number of subscribers stood at 213.5 million.

Netflix’s profits amounted to $1.45bn, or $3.19 per share, comfortably beating the $2.57 per share forecast by Wall Street and $1.45 more than the third quarter of 2020. 

Revenue rose by 16% – just over $1bn –  from the same period last year, meeting analysts‘ expectations of $7.48bn, while operating income rose 33% vs. the prior-year quarter to $1.8bn.

Squid Game

The company now hopes to add 8.5 million new subscribers in the final quarter of 2021, in large part because of the success of the series Squid Game. 

The Korean-language show is the standout success of 2021, claiming the number one spot on the platform in 94 countries. Netflix said roughly 142 million households have thus far watched the series worldwide. 

Rising production costs

Despite this success and its imminent move into the gaming sector, Netflix stock fell because the company’s forecasted fourth-quarter earnings of 80 cents per share on sales of $7.71bn came in well below the $1.13 per share on sales of $7.66bn predicted by analysts. 

Co-CEO Reed Hastings described the firm as being in “uncharted territory” with an abundance of programming, but production costs have taken their toll. 

In a letter to shareholders, the firm stated: “After a lighter-than-normal content slate in Q1 and Q2 due to Covid-related production delays in 2020, we are seeing the positive effects of a stronger slate in the second half of the year.

”We're very excited to finish the year with what we expect to be our strongest Q4 content offering yet.”

By 11:30 (EST), Netflix traded down 1.2% at $631.05, 20.6% higher than its 2021 starting level. 

Further reading: Japanese yen falls to four-year low

The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com Bel LLC or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved.
iPhone Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image