Netflix Inc. Increases Subscriber Base But Shares Decline
A number of new subscribers may have signed up for the streaming service of Netflix Inc. with the release of “Arrested Development,” but shares of the company declined by four percent during after-hours trading recently.
According to CFO David Wells and CEO Reed Hastings, a slight increase in membership was noted after new episodes of the quirky comedy were posted on the site. Around 630,000 clients were added into the US market, which is half of the forecasted increase of the company.
However, analysts were not impressed even as shares of the company increased by 183 percent since the start of the year following the news of upcoming shows reached the media. Recently, shares declined by around four percent as it went down to $251.52 during after-hours trading last Monday.
The quarter was considered good by Arvind Bhatia of Sterne Agee, but it was not good enough. Bhatia indicated that the Netflix Inc. was expected to increase its subscriber base by 700,000 clients in the US. However, forecasts of analysts were surpassed by the company as profits reached $29 million or around $0.49 per share. This was much higher than the $6 million in profits that the company reached last year.
Quarter revenue increased by 20 percent as it went up to $1.07 billion from $889 million last year.
Netflix Inc. also got fourteen Emmy nominations last week, with the “House of Cards” becoming the first Internet series to receive nominations.
Hastings indicated that the company was satisfied with the response it received for its original programming. Ted Sarandos, Chief Content Officer at Netflix inc. said that the audience size of its original shows was similar to the audience size of television shows.
The company also indicated that it us aiming to increase its streaming client base by 1.5 million for the quarter. However, Brett Harriss of Gabelli & Co indicated that the company needs to substantially increase its subscriber base to validate its current value.
US streaming clients of the company have reached 29.8 million for June even as international streaming clients have reached 7.8 million.
In order to pay for the cost of TV shows, movies, original shows, and promotional activities in other markets, Netflix Inc is working on increasing its subscriber base.