The following video is part of our "Motley Fool Conversations" series in which we talk about topics across the investing world. This time, Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova talks about the one number that stands out in Netflix's poorly received first-quarter earnings report.
Despite Netflix reporting better-than-expected earnings, shares of the company plunged yesterday. Why? Subscriber growth. Though Netflix expects to add 7 million members this year -- in line with its 2010 performance -- management sees just 500,000 of that total coming in the second quarter, much less than the 1.2 million that investors were expecting.
Analysts see that as a problem created by competition with the likes of Amazon.com and Apple. I'm not buying it. Amazon has a serious distribution problem, while the Mac maker (rightly) sees Netflix as a partner, having reserved space for the service on Apple TV boxes.
Meanwhile, the Internet has made content creation and distribution a global business. Hollywood matters less; creativity matters more. Google is taking advantage by creating custom YouTube channels for original programming. (I'm already getting my fill of great stuff from the brand-spanking-new Nerdist Channel.) Netflix plays a very different, but equally important, role in this rebellion, which is why today's sell-off makes no sense. Click the video below to hear more.
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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple, Google, and Netflix at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.
The Motley Fool owns shares of Google and Amazon.com. The Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Amazon.com, Netflix, Apple, and Google; and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.