Wall Street thinks Netflix may be lowballing its subscriber numbers

Cornelia Mascio
Aprile 20, 2017

Asked how long it would take for Netflix to hit 200 million, after reaching the 100-million milestone after a decade, Hastings chuckled and said, "Shorter than the first 10 [years], for sure".

In a letter to shareholders to accompany its first quarter 2017 results, Netflix dismissed quarterly variances in customer sign-ups as "mostly noise" in the long-term growth and uptake of internet TV.

"Everybody watches TV, and almost everybody has the internet", Hastings added, saying that he does not see anything that could stop Netflix from reaching to most people in the U.S and hopefully most people around the world.

USA paid subscribers continued to grow at a slower pace than we previously projected, with trailing 12-month paid net adds at 3.7 million in the quarter, down 32% from 5.4 million at the end of first-quarter 2016, which was down 9% versus 2015. Zacks Investment Research downgraded shares of Netflix from a "buy" rating to a "hold" rating in a report on Tuesday, March 7th.

The Los Gatos, California-based company said revenue rose 34.7 per cent to $2.64-billion in the quarter.

With each piece of content it adds, whether it be a global property like the company's superhero shows from Marvel, or a market-specific series, Netflix becomes stronger. (NASDAQ:NFLX) fell 2.64% on Tuesday following the company's latest earnings report.

But this doesn't necessarily worry Netflix's co-founder and CEO Reed Hastings.

Other cable channels also are offering internet-only options as more viewers, especially younger people, eschew traditional TV packages and subscribe to streaming services instead. In fact, it's expected to spend $6 billion for it this year.

The inclination has presented Netflix with more rivalry in the contest for home entertainment budgets.

Hastings saw Netflix and rival Amazon Prime Video as competing more with people's limited viewing time than they are with one another. But in reality, Netflix is probably waking up to the crowded streaming landscape.

The company described the opportunity for its service as "gigantic" and said it planned to continue investing in films and shows tailored to win fans in countries around the world. "At that point, Netflix might disrupt itself again, as it's done throughout its history with innovations such as DVDs by mail, subscription monetization, digital streaming and original content".

The company also said it had no plans to follow Amazon's move into covering NFL football.

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