In a report Netflix, the dominant streaming video provider, stated that it added d 5.2 million new subscribers, which blew away the Wall Street’s estimations of 3.23 million during a historically weak quarter despite the return of one its original content like “Orange is the New Black”
The second quarter earnings report from Netflix was released early this week, where it just fell an inch away if analyst’s estimates on EPS, and beat on revenue. Shares of the entertainment company on the other hand soared by more than 10 hours after hours, trading above the all-time intraday high of $166.87 per share which is an increase of more than 9% over the last three months and a 64% move up over the last 12 months.
Netflix’s financial report comes on the heels of the 2017 Emmy nominations which recognized some of Netflix’s original content, this may sound good news for the video streaming provider but this also highlighted the growing competition in the digital streaming space.
Amazon builds up its content spending while Apple test out the waters by delving into original content with shows like “Planet of the Apps”. Netflix CEO Reed Hastings has told CNBC that Amazon could be a fierce rival.
In the previous quarter, Netflix stated that it would spend more than $1 billion in 2017 only in marketing cost alone, which projects that the company would have negative free cash flow for “many years” as it invests in producing more original content.
Early this week, the company noted that is expects $2 billion to $2.5 billion of negative free cash flow this year, which is a steeper fall than the $2 billion in negative free cash flow that was forecasted in the previous quarter.
Earnings per share have increased by 15 cents, which is a great improvement compare to 9 cent increase per share last year.
Reed Hasting, CEO of Netflix said that the growth of Netflix just expands the market and that the exclusivity of each service’s content means that each company are not substitutes for each other but it fills each other’s short comings.
Netflix acknowledged the increasing demands on viewer’s attention is creating a TV network is now easy as creating an app, and investment is pouring into content production all over the world.