Netflix adds 2 million U.S. streaming customers, shares jump 24 percent

Mon Apr 22, 2013 6:28pm EDT

1 of 2. A Netflix return CD mail envelope is shown in Encinitas, California, April 19,2013. Netflix Inc reported on April 22, 2013 a first-quarter profit that beat Wall Street expectations as the dominant video rental service added new streaming subscribers in the United States. Netflix shares soared to $207.39 in after-hours trading, rising 19 percent from a close of $174.37 on Nasdaq. For January through March, Netflix recorded $19 million in net income, excluding a loss for retiring debt, and adjusted earnings per share of 31 cents. Picture taken April 19, 2013.

Credit: Reuters/Mike Blake

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(Reuters) - Netflix Inc (NFLX.O) reported on Monday a first-quarter profit that beat Wall Street expectations as the dominant video rental service added 2 million new U.S. streaming subscribers, and its shares soared 24 percent.

Netflix shares rose to $216.62 in after-hours trading, after closing at $174.37 on Nasdaq.

For January through March, Netflix recorded $19 million in net income, excluding a loss for retiring debt, and adjusted earnings per share of 31 cents. The results topped Wall Street analysts' average forecast of 19 cents per share, according to Thomson Reuters I/B/E/S.

The company said it signed up 2 million new customers for its $8-a-month U.S. streaming service, the largest part of its business, with a total of 29.2 million members. In February, Netflix generated buzz with the release of the series "House of Cards," a political drama starring Kevin Spacey that marked a big push into original content.

"The launch of 'House of Cards' provided a halo effect on our entire service," Netflix Chief Executive Officer Reed Hastings and Chief Financial Officer David Wells said in a letter to shareholders.

Investors pushed shares higher in response to the subscriber numbers as well as higher profit margins from the U.S. streaming business, said BMO Capital Markets analyst Edward Williams. The domestic streaming contribution margin increased to 20.6 percent. "You had solid subscriber growth," Williams said.

Netflix said it added 1 million streaming subscribers in its markets outside the United States, which include Canada and parts of Europe and Latin America, bringing the global total to 36 million. It said it would launch the service in a new European market in the second half of 2013.

The company also said it would offer a new plan for $11.99 a month to allow four simultaneous streams from the same account, instead of the current limit of two. It expects less than 1 percent of members to sign up for it.

Revenue for the quarter was $1.0 billion, up 17 percent from a year earlier.

Netflix projected it would add up to 880,000 U.S. streaming subscribers in the current quarter, slightly more than the same period a year ago, helped by the May 26 release of one-time Fox TV comedy "Arrested Development."

Before its financial results were announced on Monday, Netflix shares had climbed 80 percent this year. Most of the gains came in January after Netflix reported better-than-expected growth over the 2012 holiday season.

Many Wall Street analysts are still on the fence about Netflix. Nineteen of 35 analysts rate Netflix "hold," nine rate it a "buy," and six recommend "sell."

Some analysts have said they wonder if Netflix will grow fast enough to pay the costs of its international expansion and its bills from Walt Disney Co (DIS.N), Time Warner Inc's (TWX.N) Warner Bros, CBS Corp (CBS.N) and other Hollywood studios that provide it with movies and TV shows to stream to subscribers over the Internet.

(Reporting by Lisa Richwine; Editing by Bernard Orr)

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Comments (3)
CptWS wrote:
The next Apple. By that I mean its logically only going to head one way, and it isnt up for much longer.

Total liabilities($5.x+bn) come in at a staggering 25-30% MORE than their total assets($4bn~)

Anyone buying, or continuing to hold, may aswell just donate their shares to charity. Same result; anyone holding will end up losing money.

Apr 22, 2013 9:50pm EDT  --  Report as abuse
SanPa wrote:
Let me get this straight in my head … $215 per share for a company that nets around $1.25/yr, more or less. So again, how many years will that take to hit parity?

I honestly have to wonder why Wall Street doesn’t hold an annual tulip or south seas commemorative festival.

Apr 22, 2013 11:59pm EDT  --  Report as abuse
Dutch_6_7 wrote:
Nineteen of 35 analysts rate Netflix “hold,” nine rate it a “buy,” and six recommend “sell.”
———————

19 + 9 + 6 = 34
Where’s the other one?

Apr 23, 2013 11:06am EDT  --  Report as abuse
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