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2 Numbers That Netflix Investors Should Cheer

Netflix (NASDAQ: NFLX  ) investors are understandably focused on just one number lately: 30%. That's the percentage drop the stock has suffered since hitting an all-time high in early March.

NFLX Chart

NFLX data by YCharts.

But while the stock has sold off, Netflix's business fundamentals continue to improve, as Motley Fool contributor Demitrios Kalogeropoulos argues in the video below. To make his point, Demitrios highlights two key numbers from Netflix's recent quarterly earnings results: zero and 25.2%.

The first figure represents the total loss from the international business that Netflix is expecting next quarter. That achievement would mark a huge turning point for the company, as overseas expansion has been a drag on earnings growth for some time now.

Source: Company financial filings; 2014 Q2 is Netflix's forecast.

Meanwhile, Netflix's domestic streaming business continues to get more profitable. Contribution margin was up to a record-high 25.2% in the U.S. last quarter. That's also very good news for investors because it shows that Netflix has been careful to keep the growth rate of content spending below that of its subscriber base. 

Source: Company financial filings; 2014 Q2 is Netflix's forecast.

For Demitrios' full take on these figures, watch the video below.

Netflix has your cable company scared
Thanks in part to companies like Netflix, you know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Surprise: They're not Netflix, Google, and Apple. 


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 01, 2014, at 3:01 PM, 24penny wrote:

    Which costs does Netflix consider fixed and which are variable? That "contribution margin" I keep hearing about is still unclear to me.

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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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