CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Netflix stock falls on weak subscriber growth

15:43 21 October 2020
  • Netflix released earnings report for Q3 2020
  • Higher than expected revenue, EPS miss
  • Huge slowdown in user base growth
  • Company remains optimistic about 2021
Netflix (NFLX.US) reported earnings for Q3 2020 yesterday after the Wall Street session closed. Release turned out to be a disappointment, especially when it comes to user growth, and caused the stock to pull back in the after-hours trading. However, the company remains optimistic about 2021 as production resumes.
Netflix reported another quarter of record revenue. However, growth continued to slow and was the lowest since the final quarter of 2019. Source: Bloomberg, XTB
 
Results
 
Netflix generated $6.44 billion in revenue in Q3, above $6.38 billion expected by markets. Earnings per share at $1.74 were much lower than expected $2.14. However, the biggest miss came in net subscriber additions. Company said that it has added net 2.2 million users globally while analysts pointed to a 3.57 million addition. In the same period last year Netflix added net 6.8 million subscribers. Asia-Pacific region accounted for 46% of net subscriber additions in Q3 2020, thanks to big increases in Japan and South Korea.
Netflix added a disappointingly small amount of new subscribers in Q3 2020. Total subscribers growth is relatively high but this is mainly due to a big increase to the user base in the first half of 2020. Source: Bloomberg, XTB
 
Outlook
 
Company projects to add more subscribers in the final quarter of the year, in-line with seasonal trends. Netflix projects that it will add 6 million new users in Q4 2020. However, this is still considerably less than 8.8 million in Q4 2019. Slower growth was expected after the company had a stellar first half of the year. As lockdowns were lifted and people spent less time at home in Q3, user growth moderated. Netflix expects full-year free cash flow at $2 billion. Executives of the company said it has restarted production on many popular titles and that it expects to achieve year-over-year growth in terms of new titles in each quarter of 2021.
 
Market reaction
 
Netflix stock fell around 5% in extended trading Tuesday following earnings report. Stock launched today's session with a massive bearish price gap. After failed attempt to break above the resistance at $508.85, which is additionally strengthened by 50 SMA (green line), price pulled back and continues to decline. Should sellers manage to uphold the current momentum then support at $ 457.73 may be at risk.
Netflix Inc. (NFLX.US), D1 interval. Source: xStation5

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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