Netflix earnings, subscribers get a ‘Squid Game’ bounce, but forecast is tamer

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Netflix Inc. experienced a bounce successful nett and subscriber additions arsenic it recovered its biggest astonishment occurrence yet successful the 3rd quarter, but predictions for the vacation play were not arsenic bountiful.

Netflix NFLX, +0.16% connected Tuesday reported 4.4 cardinal nett caller paid subscribers successful the 3rd quarter, eclipsing its ain forecast (3.5 million) arsenic good arsenic the mean expert forecast of 3.78 million, according to FactSet, and giving the streaming-video work 213.6 cardinal subscribers overall. Executives said they expect 8.5 cardinal caller subscribers successful the 4th quarter, erstwhile caller contented is acceptable to articulation Netflix’s biggest archetypal deed yet, “Squid Game,” which would lucifer the show of past year’s vacation quarter.

The mean expert estimation for fourth-quarter subscriber additions was 8.4 million, but galore analysts expected Netflix to surpass that fig handily successful its guidance Tuesday. Stifel expert Scott Devitt, for example, said helium expected much than 10 cardinal caller subscribers successful the 4th fourth arsenic Netflix “successfully releases compelling archetypal content, broadens its planetary penetration, and enters a seasonally favorable play for sub adds.”

The planetary deed bid “Squid Game,” an planetary megahit estimated to beryllium worthy astir $900 cardinal to the institution according to a recent Bloomberg News report, is simply a large crushed for an expected turnaround done the extremity of the year. Since its Sept. 15 debut, it has been viewed by 142 cardinal subordinate households.

Netflix has maintained a wide subscriber borderline successful a crowded streaming marketplace that includes rivals Walt Disney Co. DIS, +0.02%,   Apple Inc. AAPL, +1.51%,  AT&T Inc. T, +1.03%,  Comcast Corp. CMCSA, +1.92%,  Amazon.com Inc. AMZN, -0.08% and ViacomCBS Inc. VIAC, +1.40%.  But with a caller batch of wildly fashionable contented joining “Squid Game” this quarter, including caller seasons of erstwhile hits “The Witcher” and “Tiger King,” Netflix is expected to tempest backmost the remainder of the year.

For more: Can ‘Squid Game’ and videogames beryllium game-changers for Netflix?

“After a lighter-than-normal contented slate successful Q1 and Q2 owed to COVID-related accumulation delays successful 2020, we are seeing the affirmative effects of a stronger slate successful the 2nd fractional of the year,” institution executives said successful a missive to shareholders Tuesday.

Netflix warned that profitability volition apt instrumentality a deed from a question of caller programming, which is costly. Company executives forecast net of 80 cents a stock successful the 4th fourth connected gross of $7.71 billion. (Analysts person forecast $1.12 for Q4.)

In the letter, executives called “Squid Game” “our biggest TV amusement ever.”

“A mind-boggling 142m subordinate households globally person chosen to ticker the rubric successful its archetypal 4 weeks,” they wrote, portion adding that they are rushing retired merchandise tied to the show. “The breadth of ‘Squid Game’s’ popularity is genuinely amazing; this amusement has been ranked arsenic our #1 programme successful 94 countries (including the U.S.)”

Netflix said it earned $1.45 billion, oregon $3.19 a share, up from $1.74 a stock a twelvemonth agone and easy topping expectations of $2.57 a share, according to analysts polled by FactSet. Netflix’s gross catapulted to $7.48 billion, up from $6.44 cardinal a twelvemonth agone and matching Street estimates of $7.48 billion.

Netflix shares roseate astir 2% successful after-hours trading instantly pursuing the announcement Tuesday, but the gains sank backmost to little than 1% arsenic the extended trading league continued. The banal is up 17% truthful acold this year, portion the broader S&P 500 scale SPX, +0.74% has improved 20% successful 2021.

The expectations for fourth-quarter gains doesn’t needfully mean creaseless sailing for Netflix, which faces a torrent of criticism implicit its defence of comedian Dave Chapelle’s arguable special.

“Media and exertion platforms similar Netflix, Facebook FB, +1.39%, and others request to beryllium held accountable for their relation successful pushing contented that promotes hate, homophobia, transphobia, misogyny and harmful stereotypes,” Common Sense CEO James P. Steyer said successful a connection mirroring wide sentiment astir Netflix.

Meanwhile, rival Disney has warned pandemic-related accumulation delays whitethorn undercut Disney+ subscriber numbers for the existent quarter, prompting Barclays expert Kannan Venkateshwar to caution the media empire could look “structural” problems successful its streaming operations. The expert connected Monday downgraded Disney’s stock to equal-weight from overweight and reduced its terms people to $175 from $210.

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