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Netflix Inc. (NFLX) released its fourth-quarter results after the markets closed on Thursday. Judging by the reaction of stock prices, investors were not impressed by how the streaming giant ended 2018 and guided its future.
The company's shares fell 2.8% after office hours, despite forecasts by badysts in several areas. This tells us that investors, who have been offering stocks up about 50% since the beginning of the year, were expecting an even better performance.
Here are some key elements of the Netflix results:
Subscriber numbers continue to swell
Investors and badysts are keeping a close eye on the number of subscribers, believing they are a good indicator of Netflix's popularity in the face of growing competition and a critical way to judge whether its billions of dollars in investment are paying off.
The company did not disappoint in this area. Netflix added 8.8 million new paying subscribers in the last three months of 2018, well above its own estimates of 7.6 million.
Encouragingly, management expects to welcome an additional 8.9 million subscribers in the first quarter ending in March. Many of these new customers are expected to come from international markets, although Netflix is also confident that the number of US subscribers will increase, despite the recent price increase.
Disappointing income
Unfortunately, the strong growth in the number of subscribers has not sufficiently boosted the business figure. Revenues increased 27.4% from the previous year, when they were expected to increase by 27.8%.
Management has blamed this failure on the strength of the US dollar and warned of new challenges in the first months of 2019. Netflix now expects first-quarter revenues to rise 21 percent to $ 4.49 billion. . Once again, this is lower than what badysts said, suggesting that currency and other negative factors would continue to hurt the strong growth in subscribers and the benefits of higher prices.
More money burning
Investors may also have been disappointed that recent price increases would not immediately reduce Netflix's controversial cash flow. The company had negative free cash flow of $ 3 billion last year and expects similar levels in 2019.
Netflix has long argued that aggressive investments are needed to drive membership growth and revenue growth. The streaming giant continued to take this tone when presenting its results.
The new CFO, Spence Neumann, said during a call for results that the investments to hold more content had "exerted pressure on the company's cash flow and cash flow needs." the company in recent years, "according to CNBC. However, Neumann also said it was confident that these investments would eventually pay off and that the company's cash flow could decline from 2020.
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