THE STREAMING CROWN

Netflix just showed it’s still unstoppable

Netflix holds onto its throne—for now.
Netflix holds onto its throne—for now.
Image: Netflix
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Amazon, HBO, and Hulu be damned. Netflix just showed it’s still on top.

The streaming-video service added nearly 7 million subscribers during the third quarter of 2018, crushing its own guidance and the 5.2 million new signups analysts surveyed by FactSet expected. That brings Netflix’s global audience total to a staggering 137 million streaming subscribers worldwide, the company reported (pdf).

Shares of Netflix popped as much as 15%, to $398 in after-hours trading today (Oct. 16).

Netflix needed stellar subscriber growth this quarter to prove it could maintain its dominance in the face of an onslaught of new and growing streaming-video competitors, including Amazon, Hulu, Disney’s upcoming streaming service, and the various of subscriptions on the way (paywall) from WarnerMedia. Last quarter, it missed estimates for subscriber growth, which sent its stock spiraling. Netflix shares have yet to recover from that July drop, amid a broader slide among US tech stocks.

Still, Netflix is one of 2018’s fastest-growing S&P 500 stocks, with shares up as much as 81% year to date, according to Sentieo data.

Netflix posted strong gains among both US and international streaming subscribers, with the latter driving a majority of the growth, as expected. The company did not attribute the growth to specific countries in its letter to shareholders today, but growth in India may have been a buoy. Credit Suisse analyst Douglas Mitchelson noticed a massive year-over-year boost in mobile app downloads in India in the third quarter, which he used as a proxy for subscriber growth, Yahoo Finance reported. Netflix landed its first hit series in India during the period, with Sacred Games.

Netflix shares live and die on quarterly subscriber growth. But starting in January 2019, Netflix will tweak how it forecasts subscriber numbers. The company said it will offer guidance only on paid-member additions, rather than total subscriber additions, which also include people who sign up for free trials. Netflix said growth in paid memberships is more stable. This quarter, it added about 6 million paying members worldwide, up from 5 million during the same period last year.

Revenue rose 34% year-over-year, to $3.99 billion during the quarter, and earnings increased to 89 cents per share, up from 29 cents a year ago.

Want a better understanding Netflix and other streaming giants? Check out our guide to the streaming-TV wars