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Netflix shares surged early Thursday, rising over 5% to $300.53 following the release of its third-quarter earnings report after the market closed yesterday.
Netflix Inc. (NFLX) reported third-quarter results that exceeded investor expectations. The company delivered strong top-line numbers, while its bottom-line performance was particularly impressive. Netflix reported a profit of $665.2 million, with revenues at $5.24 billion, slightly below the expected $5.25 billion but up from $4 billion year-over-year. Earnings per share (EPS) came in at $1.47, beating forecasts of $1.05 per share and significantly higher than the 89 cents recorded in the same period last year.
The strong third-quarter performance sent Netflix shares up by more than 10% early in the trading session, even as competition in the streaming sector continues to heat up with new players entering the market. Netflix has long competed with Amazon Prime and Alphabet’s YouTube, but the coming months will see a wave of new major entrants in the space.
In the U.S., Netflix added 517,000 new subscribers, below the expected 800,000 and the 1.5 million added in the same quarter last year.
Internationally, Netflix added 6.26 million paid net subscribers, slightly above expectations of 6.2 million but lower than the 7.3 million added year-over-year.
Overall, Netflix added 6.8 million net streaming subscribers in the third quarter, falling short of the company’s earlier forecast of 7.0 million new subscribers for the three months ending in September.
Free cash flow for the third quarter was -$551 million, an improvement from -$859 million in the same period last year. The company reiterated its full-year free cash flow guidance of around -$3.5 billion and expects free cash flow to improve in 2020 compared to the current fiscal year.
For the fourth quarter, Netflix expects EPS to be 51 cents and anticipates adding 7.6 million global subscribers. The company also provided fourth-quarter sales guidance of $5.44 billion.
The stock opened with a gap up, gaining 5.15% to reach $300.81, its highest level in two months, following the strong third-quarter earnings report. NFLX broke through its 50-day moving average, with the next resistance level at $308.66, the daily high, and further resistance at $318.16, the 100-day moving average. On the downside, immediate support is at $302.17, the daily low, followed by $287.22, the 50-day moving average.