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Netflix (NFLX) Stock Soars on Phenomenal Q2 Earnings Blowout

By U.S. News & World Report

Netflix (ticker: NFLX) stock surged in after-hours trading on Monday following its second-quarter earnings report after the bell. While earnings per share missed by a penny, NFLX posted three major beats, exceeding analyst expectations on revenue, subscriber growth and third-quarter guidance.

Netflix stock was up more than 8 percent in afternoon trading, hitting all-time highs at more than $176 per share.

Earnings per share came in at 15 cents, up 67 percent from the 9 cents per share the company made a year ago, and a penny shy of the 16 cents per share analysts expected.

[Read: FANG Stocks: Which One Is Leading in AI?]

Revenue, however, clocked in at $2.785 billion, an increase of 32.3 percent from the same quarter last year. Analysts were calling for Netflix to report revenue of $2.76 billion.

Netflix also issued guidance for the third quarter, during which they expect to churn out EPS of 32 cents on revenue of $2.97 billion, both major beats. Analysts had been expecting the company to earn 23 cents per share on revenue of $2.87 billion in the third quarter.

Going into Monday’s close, NFLX stock was up a remarkable 30 percent year-to-date; the Standard & Poor’s 500 index, for its part, was up about 10 percent for the 2017 calendar year. It looks like Netflix shares are certain to see that bullish trend continue, at least for now.

The second quarter saw new seasons of “House of Cards” and “Unbreakable Kimmy Schmidt” come out, and along with series like “13 Reasons Why,” which was released on March 31, that content helped create subscriber growth of 5.2 million — exceeding FactSet estimates by a full 1.97 million. Membership soared from 99 million to 104 million, crossing the 100 million mark for the first time.

While beats on revenue and guidance are great, subscriber growth is really what NFLX investors are paying attention to.

Subscriber growth and investment. Of those 5.2 million new members, 1.1 million came from the U.S., while 4.1 million came from international markets. Overseas growth is where the majority of net subscriber additions will come from in the future, as the domestic market continues to saturate.

At the moment, international markets are not profitable. The international segment posted a loss of $13 million in the second quarter on revenue of $1.165 billion. Last quarter, NFLX predicted it would lose $28 million on $1.14 billion of revenue internationally in the second quarter, so despite those small losses, there’s a reason markets were happy. And, as the letter to shareholders emphasized in bold, the international segment is expected to break into the black for the first time for the full fiscal 2017 year.

“The more noticeable news is that the overall quarterly profits have grown more than twice the rate of revenue,” says K C Ma, professor of finance at Stetson University. “This couldn’t come at a more opportune moment, in light of the rising operating cost of producing local original content for international markets.

“This also reflects Netflix’s superior pricing power over fierce competition from Amazon.com ( AMZN), Hulu, YouTube Red, and Time Warner’s ( TWX) HBO,” Ma says.

[See: 10 All-American ETFs to Buy Now.]

That said, as longtime Netflix stock owners know, this business is about spending money to make money, and Netflix has never been afraid of spending. As evidenced by its 91 Emmy nominations — almost double last year’s number — the company’s investments are translating to quality programming.

Most of the big bucks going forward will be spent on creating original content, with the company expected to spend $6 billion on content in 2017. Eventually, it aims to have a full 50 percent of its library be original content.

And while Netflix has become a nearly ubiquitous activity for many Americans, some market observers think the company’s services can become an even more entrenched part of people’s daily lives.

“Netflix will continue to grow hours per user via innovations like downloadable content, which enables viewing without Wi-Fi and data plans,” says Eddie Yoon, the founder of EddieWouldGrow, a think tank and growth advisory firm.

Concerns. Competition and valuation have been common investor concerns in the past, and are likely to remain concerns going into the future. As Ma mentioned, the streaming space is getting crowded, and Amazon alone is also dumping billions into its content factory this year in an effort to fight Netflix for subscribers and screen time.

As for valuation, NFLX stock has long traded at defiantly elevated multiples from a fundamental perspective, and even at the close of trading on Wednesday it traded for 207 times earnings. Such is the value of a company Netflix’s size that’s able to consistently grow the top line by well over 20 percent annually.

[Read: Pros and Cons of Buying Netflix Stock.]

But as time goes on and that revenue growth inevitably begins to come back down to earth, the streaming giant will have to crank up the profits even more rapidly — or else likely suffer the wrath of the market. Today, as NFLX stock passes 100 million subscribers and notches new all-time highs, that’s not really a concern.

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Netflix (NFLX) Stock Soars on Phenomenal Q2 Earnings Blowout originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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