Wall Street thinks Netflix may be lowballing its subscriber numbers

Brittany BishopApr 19, 2017

"For the first half of this year, for example, we expect to have 8.15 million net adds, compared to 8.42 million net adds in the first half last year". The earnings report predicts Netflix aims to have a total of 101.95 million memberships by the end of Q2, with the company's executives stating Netflix will break the 100 million total membership barrier by this weekend.

Over the past decade, "what really did it for Netflix was the explosion of phones and tablets that allowed people to watch video everywhere", said Wedbush Securities analyst Michael Pachter.

CEO Reed Hastings said Netflix is expecting to cross 100 million subscribers this weekend, almost a decade out from launch. Its stock surged $1.90 to $149.15 in Monday's extensive trading, even though user growth through the first four months came in somewhat below management estimates. During which, Netflix has scored 72 million more subscribers. In the first quarter Netflix was reported to have 98.75 million subscribers but this weekend will finally bring glad tidings for the site.

The Los Gatos, California company now has a market value of about $63 billion. It's hard to imagine that letting "consumer choose" would result in anything but an overwhelming majority of moviegoers opting to simply watch new release films on the service they're already paying (a much more reasonable fee) for.

Responding to the emergence of "virtual MVPDs" like Sling, YouTube TV and Hulu's upcoming OTT service, the shareholder letter noted: "We believe VMVPDs will likely be more directly competitive to existing MVPD services since they offer a subset of the same channels at $30 to $60 per month, and may appeal to a segment of the population that doesn't subscribe to a pay-TV bundle".

The inclination has presented Netflix with more rivalry in the contest for home entertainment budgets.

Netflix's stellar stock performance has so far hinged on its ability to continually add new subscribers.

The model works from a customer viewpoint because it is such a great value, Pachter said. Netflix will spend more than $1 billion in marketing this year to drive customer acquisitions.

Total revenues jumped to United States dollars 2.637 billion from 1.958 billion the year before and against the company's guidance of 2.5 billion.

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