Netflix Burns A Record $19 Million Per Day As Growth Slows; Q1 Forecast Disappoints

Two quarters ago, when Netflix subscriber growth hit a brick wall and US subs actually declined, we asked  "is the Netflix growth juggernaut finally dead?" because in its Q3 letter, Netflix said it will add 26.7 million customers in 2019, fewer than it added last year, and the first annual drop in growth this decade.

Then, last quarter, the juggernaut appeared to find yet another "second wind", with the stock surging after the company reported its Q3 earnings, which sparked a short squeeze after Netflix beat on the top and bottom line despite missing on total subs while again slashing guidance (that particular squeeze did not last long and the stock quickly slumped, only to soar starting roughly at the same time as the Fed restarted QE). And just so Apple isn't the only "growth" company to slash various reporting metrics, Netflix joined in and announced that it would stop differentiating between domestic and international margins:

"as we self-produce and license more original content that has global rights, we are finding US segment contribution margin reporting is becoming less useful internally. We’ll stop reporting on it in January 2020 and continue to focus on global operating margin as our primary profitability metric"

Translation: international margins are no longer growing fast enough to merit their own talking point among the investment community. And with the company growth slowing rapidly, especially now that there are numerous other competing streaming services, then we can only assume that it is only a matter of time before Netflix stops reporting its subscriber numbers altogether.

Fast forward to today, when with NFLX trading at the highest level since last July (curiously, unlike most other tech darlings which made new record highs this year, Netflix is still trying to claw back to levels last seen before its 2Q’19 report in July), moments ago Netflix appears to have found yet another "second wind" reporting a beat on revenue, earnings, and Q4 subs, even as it once again trimmed its outlook for the next quarter.

First, the good news: NFLX reported Q4 revenue and EPS of $5.47BN and $1.30 both beating expectations of $5.45BN and $1.05; Q4 global streaming subs rose by 8.76MM, on par with the company's additions a year ago, and also above the company's own 7.6 million estimate and Wall Street's 7.65MM forecast. Of those, just 420,000 came from the U.S., while 8.33 million came from abroad. In total, this was the third-best quarter for total NFLX subscribed growth in history, following the blockbuster Q4 2018 and Q1 2019.

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