Netflix stock fell in pre-market despite earnings beat

• Earnings and subscriber growth beat expectations
• Revenue in line with forecasts
• Company expects negative cash flow in Q4

Netflix  (NFLX.US) shares fell more than 2% in premarket despite the fact that the streaming giant beat analysts' expectations on earnings and subscriber growth which typically have a bigger impact on stock performance than its revenue and EPS figures. Company earned $ 3.19 per share well above market expectations of $ 2.56 per share and reported an addition of 4.4 million subscribers, much better than 3.84 million expected. Netflix ended the third quarter with 213.56 million streaming subscribers worldwide and announced it will use new metrics for reporting viewership. The company will start reporting hours viewed rather than the number of accounts that watched. Netflix believes  that the new metrics “matches how outside services measure TV viewing and gives proper credit to rewatching.” Company will also release title metrics more regularly outside of its earnings report, it added.

On the other hand, revenue of $ 7.48 billion only met Wall Street projections and the company expects that margins in the fourth quarter will be less than half of the same period last year as a big content release schedule results in higher amortization costs. Netflix forecasts that free cash flow will be negative in the current quarter as it ramps up production and launches more originals which dented investors sentiment towards the company's stocks.

Netflix stock (NFLX.US) stock dropped over 2% in today's pre-market trading and is currently testing local support at $626.05 which coincides with 50 SMA (green line) and 23.6% Fibonacci retracement of the last upward wave. Source: xStation5