The Candle Flickers on Netflix

Netflix posted earnings of 43.5 million or 70 cents a share and revenue came in at 519.8 million. Allan Edwards, the Co-CEO of the Markets are open noted in his research note to clients "in my valuation of Netflix I assumed revenue of 524.4 million this drop off of 5 million greatly alters my future analysis of the stock." Edwards view seemed to be shared with Wall Street as Netflix fell over 9% in after hours which is from the time the markets close until 8:00PM where typically machines accept trades usually at a lower volume. Edwards continued "this is the top line growth that I look for which Apple had and IBM didn't. In order to build a successful business a company's top line growth is just as important as bottom line growth." This is because a company's top line comes from growth while the bottom line can come from cost cutting. Despite these concerns Netflix increased subscribers by 42% from 10.6 million to 15 million. Edwards said, "I just thought subscriber growth would be even more I was really looking for anything more than 42%, if it was 43... it would be different." Edwards was asked what disappointed him the most. Edwards stated, "I just really wanted to see a good number, Wall Street needed it, I needed it."