Netflix soars as 7 million more tune in

NETFLIx shares surged last night as the online video juggernaut defied critics and piled on millions more subscribers than expected.

The US firm added nearly 7m users in the third quarter as its efforts to appeal to a global audience appeared to pay off.

This was higher than the 5m it had forecast, taking the total number of users worldwide to 137.1m – more than twice the UK’s population.

It reported revenue of £3bn and a profit of £306m for the period.

In a letter to shareholders, Netflix said: ‘Our broad slate of original programming helped drive a solid quarter of growth. We’re thrilled to be growing internet entertainment across the globe.’

Netflix also moved to assure investors over its continued massive spending on television and film content, saying they would underpin its sales and profit growth for ‘a very long time ahead’. The strong numbers sent its shares soaring by as much as 16pc at one stage in after-hours trading. It came after Netflix missed its subscriber forecasts last quarter, sending shares tumbling.

Ahead of last night’s results, analysts from Morgan Stanley, Goldman Sachs and Raymond James cut their price targets for the firm, basing gloomy predictions on the strength of the dollar, rising interest rates and growing costs faced by the company.

But the streaming video company is still up more than 78pc this year, the thirdbest performance of any S&P 500 stock.

It has raced ahead in the global battle for video streaming subscribers – going from 31m users five years ago to its current 175m figure. That has been fuelled by a series of blockbuster television shows catapulted the firm into the spotlight, such as The Crown, starring Claire Foy, pictured. At the same time, however, the streaming juggernaut is facing tougher competition from rivals such as Amazon, youTube and Hulu, who are forking out more cash for top shows in a search to find the next big hit. However Bill Nygren, a portfolio manager at Kansas-based Oakmark, said Netflix still had ‘ a huge advantage’. He added: ‘The quality of the product Netflix is putting out has only gotten better and the price it is offering is basically unchanged. ‘ It’s a tremendous deal relative to other audio or video services. The scale Netflix has today, in having a global product with a large number of subscribers, allows them to pay more for content.’