Netflix record Q3 subscriber growth dispels Wall Street worries

Netflix shares soar as it announces 6.96m new members

Netflix last night reported a strong jump in profits and better-than-expected growth in users in the past quarter, sparking a rally in shares of the streaming television market leader.

The streaming company released a record 676 hours of original programming in the third quarter, according to Cowen & Co, the first time it has exceeded 500 hours in any quarter.

New customers were lured in by returning seasons of "Orange is the New Black" and "Marvel's Luke Cage", as well as new shows such as "Ozark" and "Maniac", the limited series starring Emma Stone and Jonah Hill, Netflix said.

In a letter to shareholders Netflix said that it expected operating margin to be nearer 10pc for 2018, meaning that it will see margins drop in comparison to previous year. The world is Netflix's oyster. These new subscribers brings Netflix total subscribers to 137 million a userbase that is only behind YouTube's 192 million when looking at streaming services.

Shares of Netflix have done well in 2018, up about 80 percent on the year even as other tech stocks have taken it on the chin this month amid weakness in so-called FAANG group: Facebook, Apple, Amazon, Netflix and Google. Subscriber growth was stronger than expected in the US and overseas.

Executives said audiences welcomed shows tailored to specific markets, such as "Sacred Games" in India, which the company identified as key to its expansion.

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India has also turned out to be a lucrative content hub for Netflix which plans to spend more than $8 billion on original programming this year.

"The question at the end of Q2 was whether that miss was an aberration or signs of a longer-term slowdown in the business", said Forrester Research analyst Jim Nail. Domestically, Netflix added 1.09 million subscribers, compared to an estimate of 673,800.

Analysts keep setting the ceiling and Netflix keeps crashing through it. That beat analysts' average estimate of 68 cents, according to Refinitiv. "Quotas, regardless of market size, can negatively impact both the customer experience and creativity", Hastings said.

Profit in the quarter more than tripled from a year ago to $403m while revenues grew 34% to $4 billion.

Rival Amazon, which launched its Indian studios past year, plans for 17 original programs, including shows in Hindi, Tamil and Telugu.

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