UPDATED: CEO Reed Hastings told analysts that the likely price increase is due to the fact that “over the last couple of years we’ve been improving the content selection on Netflix and broadening it.” For that to continue, “we have to eventually increase prices a little bit.” He’d consider having tiers of service but first wants to “be sure we grandfather [existing customers into the new system] cleanly.” As for his opposition to Comcast’s $45B plan to buy Time Warner Cable, Hastings says that Comcast CEO Brian Roberts is “very thoughtful, very long term and very reasonable. But I don’t know that we want anyone to control half of the U.S. internet.”
PREVIOUS, 1:04 PM: Current customers could keep their $7.99 a month price “for a generous time period” if the fees for new customers go up — possibly “a one- or two-dollar increase, depending on the country, later this quarter” — CEO Reed Hastings and CFO David Wells say in a note to shareholders. They slipped that important piece of info into a report that basically reassured Wall Street, sending Netflix shares up 5.7% in postmarket trading. The company generated $53.1M in net income, up from $2.7M in the same period in 2013, on revenues of $1.27B, +24%. The revenue number is on target with the Street’s consensus forecast, and earnings at 86 cents a share beat projections … Read More »
Shares are up 17+% in after hours trading after the streaming video company walloped analyst expectations for Q4. Netflix reported net income of $48.4M, +513% vs the same period last year, on revenues of $1.18B, +24.3%. The top line was ahead of forecasts for $1.17B. And earnings at 79 cents a share were well ahead of predictions for 65 cents. Another key metric, domestic streaming subscriptions, also came in strong at 33.4M vs forecasts for 33.2M. In a letter to shareholders, CEO Reed Hastings an CFO David Wells say that they expect to end Q1 with 48M. They say that they’re experimenting with subscription prices and hope to offer three options allowing for one, three, and four streams to run at the same time. “If we do make pricing changes for new members, existing members would get generous grandfathering of their existing plans and prices,” they say. “We are in no rush to implement such new member plans and are still researching the best way to proceed.” The execs attribute much of Netflix’ growth to “the tailwind of Internet video growth in general.” They add that the company is”relatively unaffected” by recent changes in the video streaming business including Verizon and Sony’s moves to create virtual pay TV services, the U.S. Supreme Court’s plan to rule on broadcasters’ suits against Aereo, and Charter’s bid for Time Warner Cable. But they are concerned about a federal appeals court decision to upend the … Read More »
A lot of investors seem to think so. Netflix shares rose 6.1% today — closing at $247.38, the highest that number’s been in nearly two years — after the company said that it will replace its usual audio quarterly conference call with a live video discussion. On July 22 CEO Reed Hastings and CFO David Wells will answer questions from BTIG Research’s Rich Greenfield and CNBC’s Julia Boorstin. They can ask their own, and integrate others submitted to them by investors via email or Twitter. “It’s an unprecedented format, and not one you’d do it you had bad news,” says Janney Capital Markets’ Tony Wible. Today’s increase caps a 167% rise in Netflix’s stock price in 2013, and 202% jump over the last 12 months. Greenfield’s participation in the event raised a few eyebrows. “From the outside it makes it look like you’re biased,” Wible says. “There’s a soft dollar benefit to being out in front and getting this attention.” But Greenfield says he isn’t being paid, making this is no different than having an analyst question a CEO at an investor conference. “Our intellectual independence is pretty well known,” he says. “The proof will be in the questions we ask.” In April he formally initiated coverage of the company with a “buy” recommendation and a $250 price target. Up to then he had been “scared” to take the step, he said, due to its “extreme share price volatility.” Netflix’s … Read More »
UPDATE, 2:10: PM: Netflix closed at $60.28, which is -25.02% – and its lowest closing price over the last 52-weeks. During the trading day it also touched $59.20, the lowest intra-day price for the last 52 weeks. Trading volume was unusually heavy, at 24.7M shares; that’s the fourth biggest trading day for Netflix over the last year. Netflix’s stock began its dizzying decline shortly after July 12, 2011 when it announced that it would split its DVD rental and streaming businesses — and require consumers to pay 60% more to receive both services. The day after that announcement it closed at $298.73.
PREVIOUS, 10:21 AM: Company shares are down more than 25% at midday, and are close to a 52-week low. The plunge follows Netflix’s earnings report last night that warned it could fall short of its hoped-for 7M gain in domestic streaming subscribers for 2012. The company also said it expects to report a loss in Q4 as it invests to expand in another overseas market. B. Riley’s Eric Wold downgraded Netflix to “sell” this morning — and reduced his price target to $50 from $80 — saying that he’s “concerned that [Netflix] is expanding too quickly within int’l markets as domestic competition ramps.” Others lowering their target prices include J.P. Morgan’s Douglas Anmuth (to $63 from $87), Barclay’s Anthony DiClemente ($80 from $95), Janney Capital Markets’ Tony Wible ($53 from $67), Credit Suisse’s John … Read More »
In early trading Netflix shares are down about 3.3% from yesterday’s $74.47 close – and flirting with the possibility of ending the day at a new 52-week low. Investors are still trying to make sense of last night’s announcement that it struck two deals to raise $400M, with a warning that it expects a net loss in 2012. That’s a change from its previous guidance to expect “several quarters” of losses. The company agreed to sell $200M in common stock, at $70 a share, to accounts managed by T. Rowe Price Associates in addition to its $200M convertible notes offer to Technology Crossover Ventures. With the deals “we have strengthened our balance sheet and remain focused on growing our streaming subscriptions and returning to global profitability after our launch of the U.K. in 2012,” CFO David Wells said.
But several analysts say that they’re pessimistic: Caris & Co’s David Miller lowered his price target to $59 from $77 since Netflix “is sending the rhetorical signal to the Street that the effects of its Q3 public relations nightmare have not stemmed subscriber defections, at least not in the near term.” Lazard Capital Markets’ Barton Crockett says his earnings forecast is under review adding that the company’s “recent history of quick outlook changes suggests reason to be skeptical.” Janney Capital Markets’ Tony Wible questions Read More »
Netflix is in for a brutal morning: The stock is down 35% in pre-market trading from its $118.84 close yesterday as some influential Wall Street analysts tell investors it’s time to dump the stock following last night’s disappointing earnings report and forecast. Susquehanna Financial Group’s Vasily Karasyov downgraded Netflix to “negative” from “neutral.” He says that it “looks like the nuclear winter scenario is playing out” for the company as “subscriber base expansion in the U.S. appears to be minimal and losses from international launches are weighing on profitability.” The combination will “put to rest the bull case on (Netflix) as we know it.” Janney Capital Markets’ Tony Wible also downgraded the stock to “sell” – and slashed his price target in half to $51. Calling the company’s business model “unsustainable” he says: “Fundamentals are eroding, management credibility is shot, international growth is deteriorating, and margins are imploding. Furthermore, the company’s disclosures support our view that the DVD business accounts for a disproportionate amount of (Netflix’s) profits (82%),” which means investors should look at it as an old-fashioned rental company instead of a digital-age power. Even Netflix supporters are retrenching. Read More »
UPDATE, 5:30 PM: It looks like the deal Netflix announced this morning to expand into the UK and Ireland will take its toll on the company, which said during its post-earnings conference call with analysts that it will lose money for a few quarters owing to those costs. As a result, Netflix will suspend international efforts until the company returns to profitability. Weak subscriber numbers also were to blame for the ugly day: the company ended the third quarter with 23.8 million subs — about 200,000 fewer than it anticipated. “We became a symbol of the evil, greedy corporation,” Hastings told the AP. “Then we faced a reputational hit that created significantly more cancellations than we anticipated.” The churn rate almost doubled compared with a year ago and is expected to remain high thanks to fallout from Netflix’s 60% fee hike. “We’ve seen a second wave of cancellations from the price increase,” Hastings said on Monday’s analysts call.
It’s that kind of uncertain outlook that pummeled shares after hours: The stock fell $32.01, or about 27%, to $86.83 in extended trading Monday afternoon. If that decline holds up, it will mark the first time Netflix’s stock price has fallen below $100 in nearly 14 months, the Associated Press says. It’s an amazing fall for the subscription movie giant, whose shares had already lopped 61% off their all-time high in mid-July. Its market cap has … Read More »