“Bird Box” Draws 8.8 Million New Subscribers to Netflix, but 4th-quarter Revenue Misses Estimates

FILE PHOTO: The Netflix logo is seen on their office in Hollywood, Los Angeles, California, U.S. July 16, 2018. REUTERS/Lucy Nicholson
FILE PHOTO: The Netflix logo is seen on their office in Hollywood, Los Angeles, California, U.S. July 16, 2018. REUTERS/Lucy Nicholson

Dystopian movie “Bird Box” helped Netflix Inc draw a record 8.8 million new paid streaming customers in the fourth quarter, but the company fell slightly short of Wall Street’s revenue estimates and shares tumbled 3 percent late on Thursday.

The world’s largest streaming service reported revenue of $4.19 billion for the quarter that ended in December, slightly below the $4.21 billion that Wall Street analysts had forecast, according to IBES data from Refinitiv.

The company reported earnings of 30 cents per share for the quarter, lower than a year earlier due to higher spending, but above Wall Street analysts’ average estimate of 24 cents, according to Refinitiv.

Investors have come to expect fast-growing Netflix to handily beat forecasts. Without a blowout quarter, shares fell 3 percent in after-hours trading to $342.59.

“Results are broadly positive with its streaming service continuing to gain popularity, as is evident from its strong net additions globally,” said Investing.com senior analyst Haris Anwar. “But results won’t push its stock higher from here, with most of the good news already priced in after a massive rally earlier this month.”

Netflix’s global paid subscriber additions of 8.8 million topped its own forecast of 7.6 million, excluding free trial memberships. It was not clear if analysts’ targets in the Wall Street consensus of 9.2 million also excluded free trial memberships.

The company has staked its future on global expansion and creating original TV shows and movies to hook new customers and keep them paying monthly subscription fees as current TV and movie suppliers create rival services, withholding new content.

Earlier this week, Netflix announced it was raising prices for U.S. customers by $1 to $2 per month to help fund its aggressive expansion and offset mounting debt.

“Bird Box” became a cultural sensation after its Dec. 21 release on Netflix. The company estimated that 80 million households will have watched the movie starring Sandra Bullock in its first four weeks, sparking a viral reaction online.

The buzz came during the Christmas holiday season, when sales of phones and internet-connected TVs typically lift Netflix subscriptions.

Netflix added an unprecedented 781 hours of U.S. original programing in the United States during the quarter, according to Cowen & Co analysts, including drama series “Narcos: Mexico” and holiday films such as “The Christmas Chronicles.”

The blitz of original content comes as Walt Disney Co (DIS.N) has stopped supplying new movies to Netflix in order to stock its own streaming service planned for later this year. AT&T Inc (T.N) and Comcast Corp (CMCSA.O) also have digital offerings in the works.

SOURCE: Lisa Richwine, Vibhuti Sharma