Netflix Drops, Yahoo! Pops: Tech Winners & Losers

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NEW YORK ( TheStreet) –– Netflix shares fell 4.5% to $431.66 in response to a mixed earnings report.

In its second quarter earnings release yesterday, Netflix reported that its total membership base grew 33% year-over-year, with 570,000 new domestic subscribers (despite a fee hike of $1 per month) and 1.12 million new international subscribers added this quarter. This increase of 1.69 million streaming customers was well above Netflix’s own estimate of 1.46 million. Netflix’s total streaming subscriber base is now 50.05 million, 13.8 million of which are outside the United States, with expansions into Germany, France, Austria, Switzerland, Belgium, and Luxembourg planned for September.

However, earnings were shy of estimates. Netflix’s profits rose to $71 million, or $1.15 per share, from $2.95 million or 49 cents per share in the same quarter last year. Revenue rose 25% to $1.34 billion from $1.07 billion. Analysts polled by Thomson Reuters expected earnings per share of $1.16 per share on revenue of $1.34 billion. Despite missing analysts’ estimates, the company’s results were more than double those of the same quarter last year.

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“Fifteen years after launching our subscription service, we have over fifty million members enjoying Netflix in over 40 countries. As we gain new members, we are investing to further improve our content and member experience, and to expand the global availability of our service,” CEO Reed Hastings and CFO David Wells said in a press release. “We have a huge global opportunity ahead and a lot of challenges too.”

Analysts remain bullish on Netflix after the release. Citigroup reiterated its “neutral” rating on the stock and raised its price target to $453 from $410. Piper Jaffray  maintained its “neutral” rating and price target of $434, citing concerns about domestic saturation despite the positive results. JPMorgan reiterated its “overweight” rating and raised its price target to $550 from $500, noting the quarter’s international subscription strength. One notable exception, Bank of America  analyst Nat Schindler, kept an “underperform” rating on the stock, but raised the price target to $294 from to $246. He noted that the solid quarterly report, in line with analyst estimates, contained “nothing to change the minds of bulls or bears.” Jefferies also reiterated its “underperform” rating, citing rising costs in original content, but raised the price target to $350 from $300.


Despite sanctions and negative analyst coverage, America Movil shares rose 2.7% to $23.85 after yesterday’s earnings beat expectations.

The telecom giant controlled by Mexican billionaire Carlos Slim reported profits of 66.6 billion pesos, or $5.1 billion, an increase of 2.4% from the same quarter last year. Analysts expected an average of 65.8 billion pesos. Profit margins in Colombia, Brazil, Ecuador, and Peru expanded, which will mitigate the breakup of the Mexican unit due to new antitrust regulations. Net income rose to 18.8 billion pesos, or 27 centavos per share, from 14.2 billion pesos and 19 centavos per share a year earlier. Sales rose 4% to 202.6 billion pesos, above analyst expectations of 198.7 billion pesos.