Netflix can chill: Shares surge as site smashes new users predictions, after disappointing second quarter
The house of cards stood firm last night as Netflix shares soared 18 per cent on the news it had smashed its own predictions on new subscribers, reversing its second-quarter fortunes.
The streaming service, known for shows like House of Cards and Orange is the New Black, added nearly 7m new customers, 2m more than it expected.
The company said its paid membership rose to 137m, driven mainly by a large increase in non-US subscribers.
Shares rose by $59 to $392 in after-hours trading as the company showed revenues of $4bn (£3bn) in the third quarter.
Netflix slumped 14 per cent in July after a disappointing second quarter where it added 5.2m subscribers, nearly 1m less than expected.
The company said it will continue to shift its focus towards producing original content, rather than licensing other networks’ films and TV shows.
Technology analyst Paolo Pescatore said: “All of its rivals are now making huge bets on video and it cannot afford to be left behind.
“It now needs to rely more than ever on its extensive cable and telco relationships.”
Haris Anwar, a senior analyst at Investing.com said: "The company is adding subscribers with a torrid pace both in the US and globally. That trend provides a strong indicator that Netflix record spending on its content creation program is well conceived and paying off.
“After today’s report Netflix is well on track to hit its July high, given the market remains favourable."
Netflix slammed new EU regulations, which propose at least 30 per cent of content on streaming services must be from Europe.
“Quotas, regardless of market size, can negatively impact both the customer experience and creativity. We believe a more effective way for a country to support strong local content is to directly incentivize local content creators, independent of distribution channel,” it said.
Although Netflix said it can fill the quotas, this may “marginally reduce member satisfaction”. The proposals were approved by the European Parliament earlier this month and are awaiting a final sign off from the Council.