Netflix (NFLX) Stock Hits a Speed Bump; Analyst Provides First Glance on 2Q:18 Earnings
Netflix (NASDAQ:NFLX) investors got cold feet this afternoon, sending shares tumbling nearly 14% in after-hours trading. The reason? The video streaming giant delivered a softer second-quarter results with a subscriber miss across the board. Specifically, total net sub adds of 5.2 million came in below the Street’s 6.2 million sub number as both domestic and international subs came in below expectations.
Overall headline revenue of $3.91 billion came in a hair below the Street’s expectations of $3.94 billion, while EPS of $0.85 came in above the Street’s $0.79 estimate. Looking ahead, Netflix is guiding for September total revenue of $3.98 billion and EPS of $0.68, below the Street’s expectations of $4.13 billion and $0.72, respectively.
GBH analyst Daniel Ives commented, “After handily blowing away Street expectations on subs the last few years this is a clear speed bump for Netflix as the international miss was most concerning given this is the linchpin to the core growth thesis for the coming years. Domestic streaming net adds of 0.67 million vs. the Street at 1.23 million with international net sub adds of 4.47 million also coming in below the Street’s 5.11 million was a disappointment but does not move the needle on our bull core thesis that international subs will march down the path to hitting between 90 million and 100 million subs by 2020.”
“While we look forward to more details on the conference call, we believe this is a speed bump rather than the start of a negative sub trend for Netflix as the streaming market and content arms race continues to be a major tailwind for the company over the next 12 to 18 months. While the knee jerk reaction will clearly be negative from the Street’s perspective, we would be buyers of Netflix on this weakness,” the analyst added.
As such, Ives reiterates a Highly Attractive rating on Netflix shares, with a price target of $500, which represents a potential upside of 25% from where the stock is currently trading. (To watch Ives’ track record, click here)
Netflix has a lot of disappointed bulls out today, as according to TipRanks, out of 32 analysts polled in the last 3 months, 20 are bullish on NFLX stock, while 10 remain sidelined, and only 2 are bearish.