3 Things Investors Missed in Netflix's Earnings Report

For the second year in a row, Netflix (NASDAQ: NFLX  ) shareholders have had an excellent January. The stock rose by 70% to begin 2013 after the company booked stellar fourth-quarter results. This year was much the same, as Netflix reported surprisingly strong subscriber growth to send the stock higher.

But there was a lot more to Netflix's report than just subscriber growth. In the video below, Fool contributor Demitrios Kalogeropoulos highlights three points that investors might have missed in the announcement, including an upcoming turning point in international markets, new streaming video competition on the horizon, and a boost in long-term debt.

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  • Report this Comment On January 30, 2014, at 6:54 PM, duuude1 wrote:

    Hey TMFSigma,

    Good points. The improvement in international profitability will be short-lived until the big expansions in Germany/France (?) later this year. Opening new streaming markets is very expensive - I believe previous earnings reports specifically noted advertising and licensing for new markets as a few of the major expenses they incur.

    I think this hiatus in international expansion has been a break to digest this huge meal consisting of Latin America, UK, Scandinavia, etc. - like a python breaking down a pig in the gut - both from an earnings and from a learnings perspective. The rapid ability of the streaming model to amortize the licensing costs and ramp up profitability with each new subscriber was a theory that needed to be proved, and this past year+ was that experiment. I believe that the more important reason for the postprandial coma was to make sure that NFLX can even more efficiently roll out the next international expansions.

    I'm loving this NFLX ride (the ups and the downs)!


  • Report this Comment On January 31, 2014, at 9:48 AM, TMFSigma wrote:

    Thanks Duuude. Right, I think it took around 2 years to reach break-even for the Canada expansion so Europe will probably be a drag for a while.




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Demitrios Kalogeropoulos

Demitrios covers consumer goods and media companies for, as well as broader moves in the economy.

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