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Why the Netflix share price is falling



Netflix dropped 4% to US $ 339 at the closing of Friday trade following

Mixed report

Netflix's Q4 201

8 earnings report was a mixed bag. The company reported revenue of US $ 4,187 million for the quarter, and a 27% increase over the previous corresponding period. (19659005) On the bottom line, Netflix reported diluted earnings per share (EPS) of 30 cents for the quarter, Beating the consensus estimate of 24 cents. However, the company continues to lose money from a cash flow perspective with a negative free cash flow of US $ 1,315 million reported in Q4 and US $ 3,020 million for the calendar year 2018.

Netflix's subscriber base continues to grow with the company adding 8.8 million paid memberships for the quarter (1.5 million in the US and 7.3 million internationally), surpassing the expectations of 7.6 million net additions

Foolish Takeaway

2018 was a strong year for Netflix with 35% US $ 16 billion and almost double the operating profit to US $ 1.6 billion. The impressive growth was the result of a significant subscriber growth with 29 million additions in 2018 bringing the total amount of paying members to 139 million at the end of 2018.

Friday's share price fall could be explained by the softer-than-expected guidance for Q1 2019. Netflix has forecast Q1 revenue to rise by 21% over the prior period to US $ 4,494 million and diluted EPS to increase by 37% to 56 cents. In addition, it expects to add 8.9 million subscribers in Q1 bringing the total amount of subscribers to 148 million.

Investors should not be overly concerned by Friday's reaction as the share price has risen by 35% over the last 12 months and is Google Netflix ] (Alphabet)) to report its quarterly earnings with the rest of the big tech names scheduled to announce their numbers over the next couple of weeks


Motley Fool contributor Tim Katavic owns shares of Alphabet (A shares). John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the Board of Directors' The Motley Fool. Suzanne Frey, an executive at Alphabet, is a member of the Board of Directors of The Motley Fool. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Facebook, and Netflix. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, Facebook, and Netflix. We Fools may not all hold the same opinions, but we all believe that considering a variety of insights we make better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorized by Scott Phillips


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