Netflix, Inc. Missed Expectations Last Quarter But Q1 May Be Different

Netflix, Inc. Missed Expectations Last Quarter But Q1 May Be Different
NFLX Photo by Matt Perreault

Netflix shares saw a massive decline in the weeks following the news that it missed expectations for subscriber growth in the fourth quarter despite strong overall subscriber additions. However, the company’s shares have started to make a comeback now.

Strong subscriber growth expected

A new Baird survey suggests that in the first quarter of 2016, U.S. subscriber growth is going to be solid, helping Netflix redeem itself in the next quarterly report, which is due in the next two weeks, says

Netflix recently launched new seasons of its popular and successful original shows, including House of Cards and Daredevil. Baird believes the strong U.S. subscriber numbers for the first quarter can be attributed to these shows. The analysts expect Netflix’s earnings to fall 20% amid rising costs, while revenue is expected to jump 25% in the first quarter.

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Netflix is considered to be the leading SVOD provider, and in January, it announced an expanded global rollout. But it is facing increasing competition as several other companies have begun to take advantage of the cord-cutting trend. Hulu, which is a joint venture among Disney, Comcast and 21st Century Fox, has started creating original content of its own.

Both Netflix and Hulu have launched virtual reality apps powered by Facebook-owned Oculus for their services that work with Samsung Gear VR. Shipments of the high-end Oculus Rift headset began this week.

Netflix among the most-admired companies

After a four-year absence, Netflix landed back in the top 50 companies in Fortune’s World’s Most Admired Top 50 All-Stars list this month. The streaming firm’s focus on innovations and its stellar stock performance put it on the list once again.

An investor who would have invested $2,200 in buying 100 Netflix shares 10 years ago would have had his/ her stake grow immensely to $73,000 with dividends reinvested, says Fortune. Investors have a reason to be happy as the stock has improved in value over the past year, but has dropped significantly since December. However, Netflix stock is known to be very volatile. In a day, it can move by around 5% in either direction.

“It is one of the more confusing equities on the planet to figure out,” says FBR Research analyst Barton Crockett.

At 10:31 a.m. Eastern, Netflix shares were down 1.14% at $102.92. Year to date, the stock is down by over 11%, while in the last year, it is up by almost 72%.

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