- Netflix‘s subscriber growth will drive financial results well above Wall Street estimates and should boost its stock price, Goldman Sachs says.
- Netflix missed Wall Street’s expectations for subscriber additions on July 16, sending shares down as much as 14%.
- Watch Netflix trade in real time here.
Wall Street may be underestimating Netflix‘s potential to grow its subscriber base, Goldman Sachs says.
Netflix’s added 5.2 million new subscribers in the second quarter – 1.1 million in the US and 4.1 million internationally – missing Wall Street expectations for the first time in more than a year. Analysts were expecting 6.3 million – 1.2 million domestically and 5.1 million internationally. The streaming giant also warned investors that its subscribers would fall short of estimates in the third quarter.
Shares sank as much as 14% following the results. And while they have seen a small bounce, they are still down 11% from their record high of $US423.21 high set in June.
However, Terry is optimistic that Netflix will erase those loses and surge as much as 23% to $US470 in the next 12 months. Wall Street’s consensus “underestimated the size of Netflix’s global addressable market, the impact of incremental content spending, and the growing value of Netflix to both distributors and content creators,” Terry said.
Terry noted that 70% of Netflix streams are currently running through connected TVs and that it has lots of potential to add subscribers who stream videos on mobile phones, particularly in international emerging markets like India where mobile is the primary way that consumers access the internet.
Netflix was up 87% this year.
- Traders are going ‘all-in’ on the market at exactly the wrong time – here’s why they’re playing with fire
- Some of Wall Street’s biggest firms are already waving red flags on the stock market’s newest sector
- MORGAN STANLEY: Amazon’s explosive growth is masking a fault line in one of the market’s hottest sectors
Business Insider Emails & Alerts
Site highlights each day to your inbox.