Tencent Securities News Beijing time early morning news, due to good results, Netflix shares rose more than 13%. Netflix shares rose $21.90, or 13.54 per cent, to $183.60 in regular trading on the Nasdaq by the close of US stocks.
Netflix reported second-quarter net income of $66 million, or 15 cents a share, up from $40.76 million and 9 cents a year earlier, but failed to meet Wall Street analysts' expectations. Analysts on average expect Netflix to earn 16 cents a share in the second quarter, according to a survey by financial information provider FactSet. Revenue was $2.785 billion in the quarter, up from $2.11 billion in the same period last year and slightly exceeding analysts' expectations. Analysts on average expect Netflix's second-quarter revenue to be $2.76 billion, according to a FactSet survey.
The streaming giant said in its financial report that it had more than 100m subscribers, including 1.1 million domestic subscribers and 4.1 million international subscribers. By contrast, the FactSet survey showed that analysts had on average expected an increase of 631000 U.S. and Canadian subscribers and 2.6 million international subscribers for Netflix.
Bank of America Merrill Lynch said in an investor study released on Tuesday that it was optimistic about the future of streaming video service provider Netflix, according to CNBC. In the report, BofA Merrill Lynch reiterated its "Buy" rating on Netflix and raised its share price target to $199from $184. it expects the company's share price to rise further to $300. If Netflix's share price does rise to $300 compared with its current price, that means there is still 63 per cent room for the stock to rise.
The research from Bank of America Merrill Lynch means that the bank became the most bullish investment bank on the market on Tuesday on Netflix. Earlier, Netflix reported on Monday that it added 5.2 million users in the second quarter, 2 million more than analysts had expected.
If Netflix's share price is to hit the $300 mark, the company will need to increase its pricing to 7%, compared with the company's current model of an annual price increase of 5%. At the same time, Netflix needs to rapidly increase its number of users to 250 million international users, Bank of America Merrill Lynch said in its report. "pricing is a major driver because growth in the number of users takes more time to offset valuation growth, but price changes can immediately boost revenue and profits." Said Nat Schindler, an analyst at Bank of America Merrill Lynch.
We note that Netflix claims that it expects single-digit ARPU (average revenue per user) growth in the middle of the foreseeable future and that it has recently introduced price increases in the Australian market. We believe that if Netflix takes further price increase measures in the international market, it will represent an upward force for our forecasting model and support our optimistic scenario. " The report says.
Netflix forecasts third-quarter revenue of $2.97 billion, beating Wall Street analysts' average expectations of $2.87 billion. (nebula)