Netflix Slides After Earnings Miss, Light Guidance As It Burns $15 Million In Cash Daily

Last October, when Netflix reported stellar Q3 earnings and guidance there were many skeptics who said there is no way Netflix could possibly hit its impressive forecasts. They were right because moments ago the video streaming company reported Q4 earnings which missed on revenue and revealed light guidance for Q1 even as it reported mixed subscriber numbers.

Specifically, Q4 EPS was $0.30, well below the $0.41 reported a year ago if slightly above consensus expectations of $0.24. Revenue of $4.187BN, however, came in light, missing expectations of $4.21 billion. Looking ahead, Netflix reported that Q1 forecast revenue would be $4.494BN, also below the exp. $4.6BN, with EPS of $0.56 also sharply missing consensus expectations of $0.94.

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Perhaps, more importantly, the company reported 8.84 million paid net streaming additions, which while below the 9.40 million guidance from last quarter, is not apples to apples as starting this quarter the company is only reporting paying subs, not total subs. That said the number is an 8% increase from a year ago, and will largely be thanks to international subs, which were an addition of 7.31MM in the quarter, up from 5.07MM in Q3, while domestic paid subs rose 1.53MM, up from 1.00MM in Q3.

The problem is that in Q1, Netflix expects a decline in International sub growth, from 7.31Mm to 7.30MM, resulting in a total of 88.07 million international paying subs, even as Paid Domestic Subs increase by 1.60MM in Q1 to 60.09 million subs.

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In other words, the recent torrid growth pace now appears to be moderating, even if the total number of forecast Global Q1 subs of 8.9 million is slightly above the 8.5 million consensus from 2 analysts.

Which brings up the question- why did Netflix just announce a price hike, to which we bring up the answer provided by Anthony DiClemente who before earnings was worried that the market is "pricing in perfection" and wondered if the real story behind this week’s price increase is that the company sees revenue coming more from fee increases than subscriber growth.

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