Netflix shares dip as Q4 revenue misses estimates

Netflix cut its outlook for the current quarter as its revenue and subscriber growth disappointed some investors, sending the streaming giant’s stock tumbling nearly 4 percent in after-hours trades.

The company, which has been spending billions as it cranks out original films and series like “Bird Box,” “Roma,” “Stranger Things” and “Tidying up with Marie Kondo,” said new shows helped it close the year with more than 139 million paid subscribers, but also contributed to its cash-flow deficit.

Netflix said its cash burn will peak in 2019 and likely drop off in coming years. In the fourth quarter, the company said its negative free cash flow expanded to $1.32 billion versus a year-ago deficit of $524 million, bringing its cash burn up to $3 billion in 2018.

Netflix CEO Reed Hastings said that the company’s spending strategy has helped it increase market share and customer loyalty.

“In the US, we earn around 10 percent of television screen time,” Hastings said, explaining that Netflix streams 100 million hours a day to TV screens in the US, accounting for “billions” of hours a daily.

During the fourth quarter, Netflix added 8.8 million paid memberships, 1.5 million in the US and 7.3 million internationally.

Netflix, which raised prices for most US subscribers by $1 to $2 a month earlier this week, said net income fell to $133.9 million, or 30 cents a share, from $185.5 million, or 41 cents, a year earlier.

Revenue grew 27.4 percent, to $4.19 billion. Analysts expected EPS of 24 cents on revenue of $4.21 billion.

For the current quarter, Netflix expects EPS of 56 cents on revenue of $4.49 billion compared with Wall Street’s estimates of 82 cents revenue of $4.61 billion.

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