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Netflix subscriber numbers surge to push market value above $100bn
Netflix bagged 8.33m new subscribers in a bumper quarter end to 2017 and expects to add 6.35m more in the first quarter of 2018, news that sent its market value above the $100bn mark overnight.
Netflix said 6.36m of its new subscribers added in the quarter were from overseas and totted up to a total membership of 117.58m globally. For the whole of 2017, Netflix grew streaming revenue 36% to over $11bn and added 24m new memberships compared to 19m in 2016.
This performance, well above the quarterly estimate of 5.1m subscribers worldwide, caught Wall Street by surprise and sent the company's stocks soaring a 9% higher to a new high of $227.79 during regular trading. This comes on top of a share price gain of approximately 64% in 2017.
For the first time the company generated a full-year positive international contribution to profit and more than doubled global operating income.
The success of Netflix on Wall Street depends on the subscriber additions which in the mind of investors are streams of never-ending revenue, and as Netflix continues to grow the stocks are expected to fare well.
Since Netflix's strongest potential is the ability to engage with international audiences, its investment in localised content has been a huge success and is partly the reason for its growth rate.
"From their earnings, it shows they are the king of the entertainment business," said market analyst Naeem Aslam at Think Markets. "The firm is executing on its plans which is yielding impressive growth. Netflix is taking an advantage of cheap money to fund its projects, however, if their access to capital is restrained, it could have problems."
Even though competition is growing, Netflix "flexed its muscles" last night, Aslam said, to show investors that the "they are the king of the entertainment business".
The company is expected to add 6.35m new subscribers in the first quarter of 2018 even though competition is also growing and strengthening their streaming services.
"The market for entertainment time is vast and can support many successful services," the company said.