What Led to the stock crash: Netflix, Inc.(NASDAQ: NFLX) stock fell over 2.9% on January 18th, 2019 (as of 11:25 am GMT-5; Source: Google finance). The company had reported the adjusted revenue growth of 27 percent to $4.19 billion in the fourth quarter of FY 18, missing the analysts’ estimates for revenue of $4.21 billion.
Netflix’s operating margin shrank in the quarter, because of the heavy load of titles released. In addition to “Bird Box,” 40 million households watched a series called “You,” about a stalker. The top unscripted show was the much-talked-about program on housecleaning called “Tidying Up with Marie Kondo.” The company also called out the successes of content overseas from Turkey and the U.K.
For this year, Netflix expects negative cash flow of about $3 billion, in line with 2018. The company said it was hiking its rates by $1 to $2 a month in the U.S.
Overall Financial performance: Netflix reported that it added 8.8 million new paid streaming subscribers in the fourth quarter. Analysts on average expected Netflix to report about 7.5 million new subscribers on average, according to FactSet. For the current quarter, when prices will increase for new customers, Netflix predicts 8.9 million new customers, higher than analyst expectations heading into the report of about 7.8 million on average, according to FactSet. Netflix said in October that its subscriber-forecast numbers would likely decrease because it will stop counting free trial memberships as new subscriptions. Netflix Inc.’s “Bird Box,” “You” and other new programs helped attract millions more subscribers to the streaming service last quarter. But slower sales growth disappointed investors riding high on a 50 percent stock gain in recent weeks.
Netflix is racing to keep its huge lead in an increasingly crowded field of streaming services, with competitive offerings coming from Walt Disney Co. and AT&T Inc.’s WarnerMedia later this year. The company’s long-term programming budget stood at $19.3 billion at year end, up from $18.6 billion three months earlier.
NFLX in the fourth quarter of FY 18 has reported the adjusted earnings per share of 30 cents, beating the analysts’ estimates for the adjusted earnings per share of 24 cents, according to FactSet.