Earnings Report Boosts Market Cap Above The $100-Billion Mark and Makes Us Great Profits!
by Ian Harvey
January 24, 2018
Netflix, Inc. (NASDAQ:NFLX)
Here is an update of Netflix’s winning options call trade after reporting earnings. This options trade was recommended as a consideration in the article "Earnings Predictions for the Week Beginning January 22, 2018”; which produced excellent potential profits of 365% within 24 hours of executing the trade!
YOU NEED TO BE IN TO PROFIT!The Recommendation……
Netflix, Inc. (NASDAQ:NFLX) – A streaming video
provider, will report after the market closes. The consensus earnings
estimate is $0.41 per share on revenue of $3.28 billion and the Earnings
Whisper number is $0.43 per share. Consensus estimates are for
year-over-year earnings growth of 173.33% with revenue increasing by 32.39%.
International growth has been fantastic, and the company has
consistently shown faster than expected growth overseas. The strong subscriber
numbers in recent quarters has helped drive shares to record highs, and Wall
Street remains very bullish on the stock moving forward.
The stock outperformed in 2017, and has risen 9.3% since the start of the year.
Short interest has decreased by 17.6% since the company's last earnings release. Overall earnings estimates have been revised higher since the company's last earnings release.
The holiday quarter is
usually a strong period for Netflix as TV-watching time spikes and millions of
new internet-connected devices come online. That tailwind joins a few other
positive trends, including rising demand in international markets, as already
mentioned, and an improving content catalog, to paint a bright picture for sales and
Option trade to consider: Buy the NFLX FEB 16 2018 230.000 CALL at approximately $6.20.
Internet TV giant Netflix had a bumper fourth quarter. The company added a whopping 8.3 million streaming subscribers, with 1.98 million coming from the U.S., and 6.36 million coming from international markets. That's 18% more subscribers than Netflix added during the fourth quarter of 2016.
Following Tuesday’s gap-up of over 10% for NFLX, it has now gapped up following 15 of its last 16 January earnings reports.
With Netflix’s move higher Tuesday, its market cap has pushed above the $100-billion mark. That’s a big deal because it joins an exclusive club of 60 other companies that have a market cap of more than $100 billion.
Netflix has been able to hold the cost of subscriber acquisition steady over the past few years, and that trend didn't change in the fourth quarter. International marketing spending was $224.2 million, up 25% year over year. Revenue grew at a faster 63.6% rate.
Each of Netflix's 6.36 million new international subscribers during the
fourth quarter cost just $35.30 to acquire via marketing spending. The
trailing-12-month international subscriber acquisition cost has remained
roughly flat, a sign that Netflix has room to pour more marketing dollars into
Much of Netflix's increase in 2018 marketing spending will likely go toward growing the international business, given that's there's no sign of saturation.
Netflix now has 54.8 million subscribers in the U.S., a number that's approaching half of all households. There's still room to grow in its home market, and the company does expect to add another 1.45 million U.S. subscribers in its first quarter. But the closer Netflix gets to saturation, the more difficult it becomes to grow the business.
Netflix expects its total marketing spending in 2018 to grow faster than revenue. The U.S. is probably the main reason for that, with the cost of adding each new subscriber increasing.
The big question is how much more marketing spending Netflix can pour into international markets before each additional dollar becomes less effective in creating new subscribers. It clearly hasn't reached that point yet.
Netflix's growth in 2017 was impressive,
but it's really just a function of how much cash the company is willing to hurl
into marketing. Total revenue increased by 32.4% in 2017, while total marketing
spending increased by 28.9%. Those numbers will switch positions in 2018 as
marketing spending ramps up.
Netflix jumped 10% to
250.29 after reporting bullish earnings and sales late Monday. Headed into
earnings, Netflix was extended from a 204.48 entry.
So, for those traders who managed to execute this trade recommended by Stock Options Made Easy; a nice tidy potential profit of 365% within a 24 hour period.
ACTION TO TAKE…….
"YOU NEED TO BE IN IT TO WIN IT!"
As you would have by now realized, many of our trades are based on earnings predictions. This is not to say all trades recommended to members follow this pattern, but during earnings season this strategy has been very profitable.
Our approach is to predict whether a company will beat or miss estimates, whether the stock will appreciate or depreciate as a result and what strategies investors and traders can use. This type of prediction is based on thorough investigation and fundamentally based research, and the results have been very exceptional.Our proven track record says it all!!
Members of Stock Options Made Easy are provided with an extensive reason as to which direction a stock will move after earnings, followed up by a recommended options trade.
What To Do Now…….
If you interested in being part of this profitable action just click here……