Netflix subscriber growth in Q3 could surpass own forecast
Netflix’s $1 price increase to its monthly subscription is unlikely to be even a speed bump on the streaming video leader’s road to continued growth.
Last week, when Netflix upped the monthly price for basic service — two simultaneous high-def content streams — to $9.99 for new subscribers, there was little clamor from customers. In part, because current customers will continue to pay $8.99 monthly for a year before the hike kicks in.
But, in general, the service is a good value, analysts say, heading into Netflix’s third-quarter earnings announcement, which is scheduled to be released after the market closes Wednesday.
“Netflix is increasingly becoming an always-on service,” wrote Stifel Financial Corp. analysts in a note after the price increase.
The price increase, they said, "is being done from a position of strength. Combined with growing global momentum in the Netflix brand and international growth. We believe Netflix will be able to post strong subscriber growth as the company heads into its seasonally strong (fourth quarter).”
Three months ago, Netflix forecast its third-quarter growth as 1.15 million U.S. streaming customers and 2.4 million international customers — additions that would push the provider’s membership to more than 70 million.
Many analysts expect Netflix to have larger-than-expected Q3 growth. Stifel forecasts 3.68 mil- lion, more an than additional Netflix’s predictions.130,000 or so WedbushIn its post-rateEquity Researchhike report,analysts forecast growth of 1.25 million U.S. subscribers and 2.5 million international subs, and another 2 million U.S. and 2.5 million international subscribers over the last three months of the year. Wedbush also expects Netflix to beat expectations by posting Q3 revenue of $1.77 billion and earnings per share of 7 cents — the consensus is $1.75 billion and earnings of 8 cents, while Netflix had forecast 7 cents. Netflix’s own forecast for expected subscriber growth for the fourth quarter could drive shares up Thursday, BMO Capital Markets analyst Daniel Salmon says. Netflix shares were up slightly Monday — 0.2% to $113.58 — after closing Friday at $113.33, up 6% for the week and 14% over the last month.