Here’s why Netflix’s stock jumped to an all-time high
Currently, the market is such that growth in big companies that chase prime numbers will slow down. Be it wireless smartphones or cable TV; the rule applies to all except for one entity, i.e., Netflix. The online video-streaming platform, it appears, has been on an upward progress journey ever since its launch and there are no signs of it, slowing down. It’s over 20 years in the business for Netflix. The company has successfully earned itself the title of becoming the world’s biggest streaming online video service. The firm recently experienced its fastest growth in the first quarter of the year. Thanks to the growth, they were able to give their stock a significant lift. According to a recent report, Netflix’s shares – which hit an all-time high of $333.98 sometime last month before selling off the recent stock market decline, went on to jump as much as eight percent.
The figure is achieving after multiple hours of trading on an early Monday morning. The value enabled individuals who were involved in the exercise to put the stock prices just pennies below an all-time high. However, CEO Reed Hastings along with other executives went on to answer analysts’ questions on one of Netflix’s famously dull quarterly calls for investors.
The exercise went on to include all the after-hours gain that shrunk to a mere five percent to roughly #324.32. According to an online report, Netflix’s overall revenue went on to increase to roughly forty percent to $3.7 billion in the quarter. However, it included the ageing DVD rental business as well. The streaming video service revenue alone went on to rise by 43 percent to $3.6 billion. With this figure, Netflix was able to achieve its fastest quarterly growth rate in history. “That was due to the combination of adding 7.4 million new subscribers, the most ever for Netflix in a first quarter, plus the price hikes the company pushed through last year, leading to a 14% increase in the average monthly subscription price,” an online report reads.
One of the main aspects that left investors and analysts impressed was the subscriber gains. The figure came in ahead of the company’s forecasts. The video-streaming platform, it seems, went on add a staggering 1.96 million new members within the U.S. market itself. This figure put in place after the 1.45 million forecast gain. The company ended up scouring roughly 5.46 million from other companies as well, after forecasting only 4.9 million. As far as Netflix’s forecast for the second quarter is concerned, the subscriber and revenue growth rate is much better than one could expect.
“We think investors will likely push NFLX stock higher after this earnings report,” UBS analyst Eric Sheridan wrote after the results came out. “We see investors focused on the widening moat that NFLX is creating with its business (faster subscriber growth on the back of original content push).” Earlier on Monday this week, Netflix’s Head Of Programming, Ted Sarandos shot down one rumour about the company that has been floating online. “Our move into news has misreported over and over again, and we’re not looking to expand into news beyond the work that we’re doing in short form and long form feature documentaries,” he said when asked about rumours of a more significant push into the news.
It appears that their decision of adding popular talk shows to their platforms might have worked in their favour. For instance, they recently added the David Letterman show. When asked about the deal with Obama, he refused to comment on the matter. It seems like there is no stopping for Netflix.
