2 Numbers That Netflix Investors Should Cheer

Here are two reasons to be a happy Netflix shareholder, despite the stock's recent drop.

May 1, 2014 at 2:00PM

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.

Nflx Profit Drag

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. 

Nflx Us Margin

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. 

 

Demitrios Kalogeropoulos owns shares of Netflix. The Motley Fool recommends and owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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