As of the morning hour in the US, it has risen more than 10%
‘Hunpoong’, a surge in subscribers outside of North America
Photo = AFP
Netflix (NFLX) is soaring in after-hours trading. This is because the number of new subscribers in the fourth quarter of last year greatly exceeded our estimate, and the company mentioned that it is considering buying back shares.
As of 4:20 am on the 20th (East US time), Netflix is trading in the after-hours market for $561.82. It is 11.97% higher than the previous day’s closing price ($501.77). Netflix shares fell 7.21% from the beginning of the year to the closing price on the 19th. If the regular market opens on the 20th, it is expected that the decline in the past will be recovered.
Netflix’s stock price surged because the number of subscribers in the fourth quarter of last year increased more than expected. Initially, Netflix predicted that the number of subscribers would increase by 6 million during this period, but in fact, it has increased by 851 million. Last year, the number of new subscribers was 37 million, an increase of 31% compared to the previous year (28 million). Last year, 83% of new subscribers came from outside North America.
In the fourth quarter of last year, Netflix recorded revenues of $6.6 billion and earnings per share of $1.19. Earnings per share fell below Wall Street’s consensus (average forecast) of $1.35. Netflix expects sales of $7.1 billion and earnings per share of $2.97 in the first quarter of this year. The company’s expectations are higher than Wall Street’s consensus sales of $7 billion and earnings per share of $2.10.
Profitability is also improving. Netflix’s margin target for the first quarter of this year is 25%, 10 percentage points higher than the same period last year (16.6%) or the previous quarter (14.4%). However, the number of new subscribers in the first quarter of this year is expected to be 6 million, which is far less than the same period last year (15.8 million). This is the base effect of the rapid increase in the number of new subscribers as the Corona 19 incident at the time broke out.
As profitability improves, Netflix’s internal cash flow is improving. Netflix’s debt is currently about $16 billion, and the company aims to settle it in the range of 10 billion to 15 billion dollars. Netflix said, “We will look for ways to return profits to shareholders through continuous treasury stock purchases.” Netflix has not bought treasury shares since 2011.
Reporter Yang Byung-hoon [email protected]
Ⓒ Hankyung.com prohibits unauthorized reproduction and redistribution