Netflix hits subscriber milestone; stock soars
Netflix streaming subscribers for the first time surpassed 30 million in the U.S. during the third quarter, executives announced, and the company’s highflying stock rose about another 10 percent in after-hours trading.
The New York Times
Pay no attention to our record-high stock price, Netflix seemed to say Monday, as it reported third-quarter results that exceeded most expectations and gave investors further confidence in the business model for its streaming television and film service.
The company said it added 1.3 million streaming subscribers in the United States in the third quarter of the year, reaching the high end of its own projections and surpassing the 30 million mark domestically for the first time.
In international markets, where it is less established, Netflix added more than 1.4 million subscribers for a total of 9.2 million.
The results impressed investors; the company’s stock, which had already almost tripled this year, rose about 10 percent in after-hours trading to $390, beating its previous high.
But Chief Executive Reed Hastings and Chief Financial Officer David Wells sought to temper enthusiasm about the stock price.
In their quarterly letter to shareholders, they said “some of the euphoria today feels like 2003,” when Netflix’s stock price quintupled in one year before sliding back to single-digit levels.
“We do our best to ignore the volatility in our stock,” the executives wrote as they redirected attention toward their membership totals, which they said have grown “every year fairly steadily.”
Netflix had projected that it would end the third quarter with between 30.5 million and 31.3 million streaming subscribers in the United States; on Monday, it said the total was 31.1 million, and released a projection for the fourth quarter of 32.7 million to 33.5 million. That eclipses the estimated 29 million subscribers that HBO’s 41-year-old pay-TV channel is believed to have in the country.
The company also said it expected to cross the 10 million mark internationally sometime during the fourth quarter.
Investors and analysts have paid close attention to the subscriber projections because Netflix has previously predicted that it could someday have 60 million to 90 million members in the United States, and even more overseas.
On Monday, Hastings, who frequently singles out HBO as Netflix’s chief competitor, hinted at a specific number it’s aiming for.
“We have done well but we have a long way to go to match HBO’s 114 million global member count or their well-deserved Emmy Award leadership,” he wrote in the shareholders letter.
Hastings also shed a little light on the relative success of Netflix’s original television shows, like “House of Cards,” the first such show for the service. “House of Cards” has apparently been overtaken by a bigger Netflix hit, “Orange is the New Black.”