The Netflix streaming service posted a net profit of $ 587 million in the fourth quarter of 2019, up 338% when compared to the $ 134 million recorded during the same period last year. Revenue increased 31% to $ 5,467 million while the Los Gatos, California company added a total of 8.76 million new subscribers globally. Earnings per share reached $ 1.30.
The market consensus expected a profit per share of 52 cents on an approximate revenue of 5.5 billion dollars. In terms of subscribers, the average projected the net sum of 618,000 new customers in the US and 7.2 million globally. Netflix dismissed the third quarter of 2019 with 158 million paid members after adding 6.8 million new subscribers during that period.
Despite these results, the company's shares fell sharply upon learning that Netflix registered fewer subscriptions than expected in the US, where it added 423,000 new customers, behind what the market projected. The company acknowledged in a statement that its low growth in new subscribers in both the US and Canada “is probably due to our recent price changes and the launching of competing services.”
However, during the subsequent conference, the company's executives assured that they have a clear advantage within the business, something that once again encouraged the price of their titles in the after-hours of the market. After all, Netflix surpassed 100 million paid members outside the US as entertainment streaming becomes a global phenomenon in which the company “works hard to take advantage of the initial progress.”
The fourth quarter of last year was the first in which the company of Los Gatos, California, had to deal with the landing of Disney +, the streaming service of the company led by Bob Iger, which opened its doors in the US market officially last November 12. It also faces the siege of Apple TV + whose premiere also occurred at the end of last year.
But not only Disney or Apple stand up to Netflix. New offers from traditional media companies emerge on this side of the Atlantic, with companies such as WarnerMedia, ViacomCBS and NBCUniversal endorsing their own services directly to the consumer.
Right now, Wall Street analysts are relatively optimistic about Netflix shares. 63% have a “buy” rating or equivalent, while 26% recommend “hold.” Only 12% of the analysts that cover this company have a recommendation to “sell” their securities. The average target price is $ 367.04 per share approximately a premium of 8% from current levels.
For the first fiscal quarter of 2020, Netflix expects its revenues to grow 26.8% over last year and reach $ 5,731 million. The company seeks to record a net profit of 750 million dollars, or 1.66 dollars per share, and increase its subscriber base by 16.9% totaling 7 million more.