Third quarter earnings season is picking up speed. Yesterday evening after the close of trading on Wall Street, Netflix (NASDAQ:NFLX) opened its books. And the streaming service presented impressive figures.
The share price had been stuck in an extended consolidation for weeks – but now, the stock is on the upswing again. Now that it has an earnings beat, its uptrend looks likely to continue.
Netflix: The World’s Leading Online Video Service
Netflix was founded in 1997 as an online video store. In its early days, it sent DVDs to customers by mail.
Today, the company from Los Gatos, California is the world’s leading streaming provider. Netflix now has around 214 million customers in almost 200 countries around the world. And the latest results signal that growth is picking up again after a small dip.
Netflix Increases User Numbers More Than Expected
In the third quarter, the company increased revenue by 16% to $7.5 billion. Net income made a jump of over 80% to $1.45 billion, or $3.19 per share.
While revenue was in line with expectations, Netflix was able to exceed estimates in terms of profit. Analysts on average had only expected earnings of $2.56 per share. Netflix also provided a positive surprise in its all-important user numbers. In the third quarter, the company added 4.4 million new customers worldwide, significantly more than the 3.5 million targeted by the company.
For the fourth quarter, management expects revenue to increase by about 16% to $7.71 billion. The number of subscribers is expected to increase by 8.5 million.
A Signal of a Future Uptrend
Even if its biggest gains are behind it, the success story of Netflix seems set to continue for now. After a short lean period, user growth is picking up again. The same is true of the share price.
Shares retreated somewhat in after-hours trading. But they’ve recently delivered a strong trend signal with the breakout from the sideways channel that had been in place since mid-2020.
From a chart perspective, everything points toward a continuation of the long-term upward trend. In the medium term, I consider prices in the range of $750 to be realistic.