Published: Sun, January 20, 2019
Entertaiment | By Minnie Bishop

Netflix shares slip as weak forecast dampens investor optimism

Netflix shares slip as weak forecast dampens investor optimism

The price increase could help Netflix foot the bill for its staggering spending spree on content. Netflix previously said it expected to spend $8 billion on programming in 2018, up from an estimated $6 billion the year before. Also missed the forecasts for sales and profit in the first quarter of the expectations. The light subscriber forecast for the current quarter is partly the result of the price increase Netflix announced Tuesday.

Using that same metric, though, Netflix also estimates that You and Sex Education - two extremely buzzy new series just released on the service - will have reached an estimate 40 million households in their first four weeks of release. The top unscripted show was the much-talked-about program on housecleaning called "Tidying Up with Marie Kondo".

The company said on Thursday it would "continue to finance our working capital needs through the high-yield market" for as long its marginal after-tax cost of debt is lower than the cost of equity.

"Many investors we spoke with in recent days expected the price increase to flow through to improved free cash flow guide".

The company earlier this week raised prices for USA subscribers from $1 to $2 per month depending on high-definition level and will be phased into all customers this year.

If they can figure out a way to get more shows like "Bloodline" and "Ozark" on the air, then more people will come.

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In the fourth quarter, the streaming platform added 1.53 million domestic subscribers and 7.31 million worldwide subscribers, both topping Wall Street estimates. The service still has plenty of second-run programs, he said, but the momentum has shifted toward its original fare. It also apologised, saying it did not mean to dishonour the tragic event in the town, and would be replacing the footage used in the show. "We serve on average about 100 million hours a day to television screens in the United States, and we estimate television screens in the U.S. are on about a billion hours daily", the company writes in its quarterly earnings letter.

In the letter, Netflix took time to big up its successes - Bird Box, which it estimates will be watched by 80 million households within four weeks of its release, and a Spanish-language exclusive, Elite, that has attracted more than 20 million.

Wall Street analysts mostly remain bullish on Netflix's global growth.

"We deeply regret that this happened and sincerely apologise to anyone who was offended, especially the victims and their families", the company said.

Raymond James' Justin Patterson maintains at Strong Buy, price target lifted from $450 to $470. "If they go from $(3) billion in 2018 to $(1) billion in 2019 and to $1 billion positive in 2020, I will give them credit for that".

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