Netflix Hits 50 Million, but That's Not Enough

Let's take a look back at the news that made waves.

Jul 26, 2014 at 3:00PM

Netflix (NASDAQ:NFLX)  shares went the wrong way this week, even as the leading premium video service's fundamentals improved dramatically. Revenue climbed 37% in Netflix's latest quarter, with profitability soaring 145%. 

Netflix is now topping 50 million streaming subscribers worldwide, and true to the scalable nature of its model, we're seeing margins expand as Netflix grows its subscriber base. That makes sense. As Netflix's user base gets larger, it can invest in more content that gets divided into more accounts. Netflix closed out the period with $7.7 billion in streaming content obligations. It's going to be hard for anyone to make that kind of financial commitment. 

Although Netflix was once again showing off its niche dominance, the market wasn't impressed. The stock closed lower in each of the four trading days following Monday afternoon's report. In a week where the tech-heavy Nasdaq posted a modest gain, Netflix stock declined by 5%.

One can always argue that Netflix stock had already discounted a strong quarter. Netflix was the best performer among all of the S&P 500 stocks last year, and it has notched a 15% gain in 2014. Mr. Market can be finicky when it comes to companies that have seen their shares appreciate dramatically ahead of an earnings report. Netflix investors learned that the hard way this past week.

Briefly in the news
And now let's look at some of the other stories that shaped our week.

  • (NASDAQ:AMZN) shares moved lower after posting disappointing bottom-line results. The market has historically been patient with Amazon's margins as long as sales growth continues at a healthy pace, but now it seems as if investors aren't as forgiving when the leading online retailer pursues new growth opportunities.  
  • Apple (NASDAQ:AAPL) posted quarterly results, with strong iPhone and Mac sales more than offsetting declines in its iPad and iPod lines, but that's not the only way Apple generated headlines during the week. Apple also confirmed the purchase of BookLamp, a developer of a book recommendation service. It's clear that e-books still matter to Apple, especially as it tries to differentiate its iPad from cheaper tablets that are gaining market share at Apple's expense. 
  • Tesla Motors (NASDAQ:TSLA) has been making waves with the naming of its Model III sedan that will hit the market in three years, but this week it idled production at its Fremont facility to start making the Model X crossover that will hit the market next year.  

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Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of, Apple, Netflix, and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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