Netflix Third-Quarter Earnings Beats Expectations; Stock Soars 10 Percent
UPDATED: The company that streams "House of Cards" and "Orange Is the New Black" has been on a tear lately, with a stock that has climbed 445 percent in a year and reached a new high Monday.
Netflix on Monday said it earned 52 cents per share, up from 13 cents a year ago, on revenue totaling $1.106 billion, up from $905 million in the same quarter last year.
The company reported having 31.45 million U.S. subscribers.
The results were better than analysts were expecting.
Wall Street analysts had projected that Netflix would earn 49 cents a share on revenue of $1.1 billion. They estimated that U.S. subscribers would reach about 31 million.
Netflix could be at an inflection point, given that it is reportedly talking to U.S. cable TV providers interested in adding Netflix and its on-demand library and original programming like Orange Is the New Black and House of Cards to their offerings.
Netflix already boasts more U.S. subscribers than HBO, which has about 28.7 million.
Company CEO Reed Hastings said in a letter to shareholders on Monday that he intends on doubling the investment in original content in 2014, but even after doing so the expenditure will represent less than 10 percent of Netflix's overall global content expense.
Netflix shares closed 6 percent higher Monday at $354.99, a new high, and were up another 10 percent after the closing bell.
Hastings also addressed the volatile Netflix stock in his letter to shareholders, writing: "Despite the huge swings in our stock price since our 2001 IPO ($8 to $3 to $39 to $8 to $300 to $55 to $330), we've continued to grow our membership every year fairly steadily. We do our best to ignore the volatility in our stock."
During a video presentation on YouTube to discuss earnings, Hastings said he took the unusual step of addressing the price of the stock in his letter because he believes "momentum investors" are driving the price higher and "it worries me."
Earlier on Monday, SNL Financial reported that Hastings has made about $38.5 million cashing in stock options since the third quarter of 2011, after having halted a trading plan following a stock plunge.
During the video presentation, Hastings was asked about his relationship with Carl Icahn, the billionaire investor who began buying millions of Netflix shares a year ago for under $59 a share.
"He says he likes people who make him money," Hasting said of Icahn. "He's happy with me for now."
Other nuggets from the YouTube presentation, which also featured chief content officer Ted Sarandos, include that the final season of Breaking Bad won't be available on Netflix until next year and that the company is considering making movies, though it would likely begin with documentaries. Sarandos said that Netflix is not interested in streaming live sports, despite reports suggesting that it had discussed such a possibility with the NFL.
In his letter, Hastings said that the company should have up to 31.8 million paid streaming domestic subscribers at the end of the fourth quarter, which will contribute up to $177 million in profit. He predicted as many as 9.7 million international streamers, which would contribute a loss of up to $73 million. The DVD business, he predicted, would generate a profit of up to $110 million, up from $107 million in the third quarter.
Also in the letter, Hastings said that Orange Is the New Black is Netflix's "most watched original series ever" and that it "enjoys an audience comparable with successful shows on cable and broadcast TV."