Adding 7 million new streaming subscriber’s to their already massive base, Netflix bolstered Wall Street’s confidence this week, reassuring investors that the company is not facing the slowdown analysts had been expecting. As a matter of fact, the world largest streaming media subscription service saw growth at a rate nearly 35 percent higher than had been forecast and is a record number of subscriber additions. Indeed, Netflix’s third quarter additions bring its customer base to upwards of 137 million around the world.
Primarily, of course, the additions helped boost Netflix’s share price: already up more than 77 percent on the year so far, the new data helped share prices jump an additional 14 percent to reach $394.25 in after-hours trading. This is a massive turn around from the end of Q2 when Netflix had missed Wall Street’s initial subscriber growth targets and shares fell about 14 percent. Now investors and analysts are seeing the Q2 dip as more of an aberration from the norm instead of a dreaded new trend that the media company has hit its growth peak.
But more important than that, the Netflix’s success also helped boost shares of other stocks. The FANG group (Facebook, Amazon, Alphabet/Google, Netflix) are typically high-growth companies, but all have suffered some recent setbacks of late. Thus, the Netflix boom saw FANG group share prices increase, though ever so slightly—by one percent—in extended trading hours.
Moving forward, it looks like Netflix is going to continue its current trajectory. For one, the company is planning to invest at least another $8 billion in original entertainment programming. This, of course, will aim at both maintaining its current subscriber base and attracting new global customers, mostly through renewals of favorite original series programming (like “Orange is the New Black” and “Bojack Horseman”) as well as original films (like “To All The Boys I’ve Loved Before,” which is the service’s highest grossing original film to date).
Finally, it is necessary to note that Netflix’s rise has exceeded both US and international market forecasts. The 1.1 million new US subscribers nearly doubled analyst’s estimates of 674,000, and 5.9 million new global subscribers still surpassed analyst’s estimates of 4.5 million.