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Netflix (NFLX) at Two-Month High on Solid 3Q Results

netflix investingcube
netflix investingcube

Shares of Netflix rallied early Thursday, adding over 5% to $300.53 following the 3Q earnings release yesterday after the closing bell.

Netflix Inc. (NFLX) reported yesterday 3Q results that pleased investors. The results were solid on top-line while the bottom line was impressive. The company reported a profit of $665.2 million; revenues came in at $5.24 billion vs$5.25 billion expected and $4 billion YOY. EPS came in at $1.47 topping forecasts of $1.05 per share and 89 cents YOY.

Netflix (NFLX) beat expectations in the third quarter, sending its shares more than 10% higher early in the trading session as the competition in the streaming sector intensifies and new players entering the market. Netflix has always competed with Amazon.com Prime and Alphabet’s YouTube, but the next months will see a flurry of new major entrants in the space.

U.S. subscribers came in at 517,000 vs. 800,000 expected and 1.5 million YOY.

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International streaming paid net adds came in at +6.26 million better than expectations of 6.2 million and 7.3 million YOY.

Total paid net streaming additions totalled 6.8 million in Q3, coming in below the company’s earlier expectations for 7.0 million new subscribers during the three months ending in September.

In the third quarter, free cash flow totalled -$551 million, versus -$859 million in the comparable year-ago period. The company reiterated its guidance for free cash flow of about -$3.5 billion for the full year, and expects that free cash flow will improve in 2020 versus the current fiscal year.

For the 4Q, Netflix (NFLX) expects EPS to be 51 cents. The company expects to add a total of 7.6 million global subscribers in the 3Q, and fourth-quarter sales guidance of $5.44 billion.

NFLX Technical Analysis

The stock started the day with a gap up, adding 5.15% at $300.81 at two-month highs after the better 3Q earnings report. NFLX breached the 50-day moving average and now the next resistance stands at 308.66 the daily high, while more offers will emerge at $318.16 the 100-day moving average. On the flipside immediate support stands at $302.17 the daily low and then at 287.22 the 50-day moving average.Download our latest quarterly market outlook for our longer-term trade ideas.

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