The third quarter results are going to shed some light on subscriber profits and costs of international expansion.
The Q3 results of Netflix, Inc.(NASDAQ:NFLX) will help investors in understanding the position of the video subscription service against the tougher competitors in the market.
Subscriber growth is almost always crucial for assessing quarterly updates of Netflix. It may not be that different when the figures for July-through-September period come out after the stock market closes on Tuesday.
The quarter accounts for a traditionally slow period for Netflix since summer’s linger daytime hours and holidays make it difficult to get people to pay extra to watch movie old TV series. Netflix executives also predicted that the broadcast of the Summer Olympics in late July and early August to dampen households from purchasing another entertainment package during the two-week period.
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In spite of such challenges, Netflix had predicted that it would gain 1 million to 1.8 million more users to its main line of business, which is streaming television shows and streaming videos with high-speed internet connection. Based on such estimates, Netflix must have ended September with 24.9 million-25.7 million US subscribers to its $8 each month streaming service.
The company had expected to lose 6,00,000 to 900,000 subscribers to its DVD-by-mail rental service. The service has been steadily declining ever since Netflix had started to charge a separate fee for the option the previous year.
The third quarter growth may determine if Netflix requires revising its goals of adding 7 million streaming subscribers in the US this year. A number of analysts believe that Netflix will have to lower its target. Arvind Bhatia, an analyst at Sterne Agee, is of the opinion that Netflix’s stock will drop if the full-year aim for subscriber growth is modified below 6 million.
Shares of NFLX are down 1.20% to $67.07.