Netflix Forecast
Summary:
October 18, 2016
Accurate Forecast:
Netflix, Inc. (NFLX), is the largest internet television network provider offering online streaming of films, documentaries, television programs, and original programs, such as the hit series Narcos, by Netflix. Netflix has been posting earnings per share exceeding expectations for the past 3 quarters. Given the company's positive revenue return, strong potential international growth, and change in consumer demand, we predicted the stock would continue its trend of reporting quarterly earnings growth. On October 17, 2016, the company reported its third quarterly earnings surpassing expectations. As a result, the stock increased by approx. 19% by the end of the trading day in October 18, 2016. Since writing I Know First's September 15, 2016, forecast article on September 15, 2016, our prediction was accurate that Netflix's stock would increase.
Continued Positive Revenue Return:
Our September 15, 2016, forecast demonstrated Netflix's fundamental strength in consistently reporting revenue and net income growth. As a result of the company's third quarter results continuing its trend, revenue grew to $2.29 billion from its previous quarter report of $2.015 billion, an increase of approx. 14%. Since the start of the year, revenue has increased by approx. 26%. Much like its encouraging revenue growth, the third quarter also reports an increase in net income. Net income surpassed its estimate of $22 million by almost double to $52 million. Earnings per share as well surpassedits estimate of $0.06 to $0.12, thus continuing its trend. A reason for this trend can be attributed to its increase in market share abroad.
