Netflix Shares At An All-Time High

Netflix Shares At An All-Time High
Netflix headquarters in Los Gatos, California, Tuesday, July 8, 2014. (Paul Sakuma Photography) Netflix website

Netflix shares have experienced a significant increase following the company’s release of its second quarter earnings. The stock price for Netflix is now $115.81, up by $17.68, which shows an impressive increase of 18.017%.


According to Netflix’s Letter to Shareholders regarding the 2nd quarter earnings, the company believes that they “clearly under-forecast in Q2” when it came to additional members. And with regard to their forecast for the upcoming third quarter, the company said, “We strive for accuracy in the forecast and our Q3 estimates are based on everything we know up to today.”

As of the second quarter, Netflix now boasts of having 65 million members with 42 million in the US and 23 million internationally.

For the second quarter of 2015, Netflix reported a revenue of $1.64 billion, significantly higher than the company’s second quarter revenue last year, which was $1.34 billion.

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Meanwhile, the second quarter of the year also saw a total streaming revenue of approximately $1.48 billion, up significantly from its second quarter total streaming revenue from the previous year of about $1.15 billion.

Furthermore, its revenue for U.S. streaming reached around $1.03 billion, also up from last year’s second quarter US streaming revenue of $838 million. At the same time, revenue for international streaming was up to $455 million, it represents a significant increase from last year’s international streaming revenue of $307 million.

Following this year’s second quarter results, Netflix has forecasted its third quarter total streaming revenue to be around $1.6 billion. Meanwhile, U.S. streaming revenue for the third quarter is expected to be around $1.07 billion and international streaming revenue, approximately $524 million.

As far as streaming members are concerned, Netflix reported that the company managed to add 3.3 million new streaming members while they only forecasted for 2.5 million. This is very impressive especially when compared to the previous quarter when the company only managed to add 1.7 million. Moreover, Netflix got 0.9 million more members in the U.S. and 2.4 million more members internationally.

Netflix attributes the higher than anticipated new membership to “the growing strength of our original programming slate.” The second quarter saw the launch of Marvel’s “Daredevil,” “Sense8,” “Dragons: Race to the Edge” and “Grace and Frankie.” Moreover, Netflix also streamed the third season of “Orange is the New Black” during its second quarter.

Meanwhile, when asked about price increase by BTIG analyst Rich Greenfield during the Q2 2015 Netflix Inc. Earnings Call, Netflix Chief Executive Officer Reed Hastings responded, “Rich, our entry-level plan in the US is actually $7.99 for our standard-def one-stream plan, so it is incredibly affordable. And that’s part of what’s propelling our growth. We also want to motivate people to be able to move up to the two-stream and the high-def and also the ultra high-def plan as you referred to.”

“Over the last year, we’ve raised ASP about 5%. We’d like to keep that moving. So we’re going to continue to have incentives for people to move up in the plans as suits their usage pattern, but we want to take it very slow. Things are going well, there’s no reason to be disruptive. We’re not planning anything in the US this quarter. It’s really focused on going very steady, very slow. And over the next decade, I think we will be able to have more and more content and add more value, and then to be able to price that appropriately.”