Netflix shares jump as subscribers grow ahead of Disney, Apple attack

Netflix shares jump as subscribers grow ahead of Disney, Apple attack”

Another house, Needham, projected the company would lose 10 million of its roughly 60 million USA subscribers over the course of 2020 unless it lowers prices, and several analysts noted the company's own "prudent" estimates for subscriber growth into the end of 2019.

Netflix reported $5.2 billion in revenue in the third quarter, up 31 per cent over the prior year, and operating income doubled to $1 billion.

"Since our United States price increase earlier this year, retention has not yet fully returned on a sustained basis to pre-price-change levels, which has led to slower U.S. membership growth", Netflix said in its letter to shareholders. Nevertheless, price action suggests the results were significantly better than many traders were expecting as shares traded to the top of the stock's implied price range. Shares closed Wednesday at $286.28, up almost 1%.

"The real test for Netflix is to show that its explosive growth, when it comes to adding more subscribers, is continuing", said Haris Anwar, a senior analyst with in a statement. "This is especially critical at a time when a number of deep-pocketed rivals - including Apple, AT&T and Disney - are launching their own services".

Netflix raised its prices almost 20% earlier this year.

The most popular Netflix plan in the United States costs $13, almost double the $7-per-month cost for Disney+.

Earlier this year, Netflix raised the cost of its subscription plans for US customers, a factor the company cited in its second quarter subscriber decline. Netflix's most popular plan, a standard subscription, went up $2 to $12.99 a month.

While strong revenue and earnings per share are encouraging, slowing subscriber growth is becoming a worrisome trend for Netflix as it fails to attract new users ahead of increased competition from Disney (DIS) and Apple (AAPL).

Netflix did admit, however that it does anticipate some early forces working against it, citing "The launch of these new services" creating "modest headwind to our near-term growth, and we have tried to factor that into our guidance". Still, that fell short of the 800,000 US subscribers the company had anticipated.

"Its original content for places like India and some European markets will mean the company will continue to be favored in the early years of these streaming wars". "The bigger you are, the more distractions you have to your core business, the more likely you can't move as quickly as we've been able to through our history".

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