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Netflix (NFLX) Stock Advances After Q3 Earnings Blowout

By U.S. News & World Report

Streaming video leader Netflix, Inc. (Nasdaq: NFLX) reported third-quarter earnings after the bell on Monday. Revenue, guidance and subscriber growth all beat expectations while earnings missed expectations, and NFLX stock added about 2 percent in initial after-hours trading.

The initial rise continues an absolutely stellar run for Netflix shares, which, before Monday’s earnings report, had gained 63 percent in 2017, 100 percent in the last year and over 2,100 percent in the last five years. The stock market is an amazing place for growth, but it doesn’t get much better than that.

In the third quarter, earnings per share came in at 29 cents, up from 12 cents in the same quarter a year ago. Analysts expected NFLX stock to post EPS of 32 cents last quarter.

Revenue rose just over 30 percent to $2.99 billion, slightly higher than the $2.97 billion that analysts expected.

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

As for subscribers, Netflix added 5.3 million of those, including 4.45 million international subscribers, much higher than the 3.65 million overseas additions the company forecast last quarter. Domestic subscriber growth was lower than expected at just 850,000.

“It may be time to start taking Netflix’s cost of acquisition into account as they push the boundaries of the marketing in the U.S.,” says Greg Portell, lead partner at global consulting firm A.T. Kearney.

There was more good news when it came to Netflix’s guidance for the fourth quarter: The company projected 41 cents in earnings per share on $3.27 billion in revenue, both meaningfully higher than consensus expectations. Going into Monday’s announcement, analysts were expecting Q4 EPS of 33 cents and revenue of $3.15 billion.

Needless to say, if you own Netflix stock there’s still plenty left to get you excited.

Price hike … for a reason. In early October, Netflix did something that NFLX stock owners loved: it raised prices. The price of a “standard” monthly subscription, which allows HD videos and streaming on two screens at once, went from $9.99 to $10.99. The premium subscription, which allows Ultra HD and streaming on four screens at once, rose $2, from $11.99 to $13.99. The hikes only affected U.S. customers, but there are quite a lot of those — more than 50 million of them, in fact.

The market responded by bidding Netflix stock 7 percent higher in two days. There were a few main reasons shareholders applauded the move.

First, many Americans echo the sentiment of CNBC’s Jim Cramer, who has praised Netflix as one of those rare services that may actually have plenty of room to increase its price without a meaningful demand backlash.

[Read: Make AMZN Stock Great Again: Time for Splitsville.]

Secondly: Netflix desperately needs to fund its rabid appetite for new content, much of which it now produces. Netflix plans to spend $6 billion on content in 2017.

Of course, original content — like the surprise hit “Stranger Things,” which returns for a second season on Oct. 31 — is precisely what makes NFLX so special.

“The key to Netflix’s ability to raise prices is its skill at developing programs that are based on its insights into customer tastes,” says Peter Cohan, lecturer of strategy at Babson College and author of the book “Disciplined Growth Strategies.”

As long as Netflix can create compelling, geo-targeted content in different places around the world, “it will be able to raise prices enough to cover the investment,” Cohan says.

Remember the concerns. On Wall Street, it never pays to get caught up in a romance with your holdings that can’t be broken. Newsflash: Your stocks don’t care about you. NFLX, despite how good it’s been to long-term shareholders, is no different.

For shares in this all-out growth stock, the main concerns are valuation and competition. On a valuation basis, Netflix stock has looked absurdly overpriced for years now, but the market seems to continually prove the haters wrong. Still, with a forward price-to-earnings ratio of 93, it’s just something to keep in mind. If there’s a broader market pullback, NFLX could be a major casualty.

From a business perspective, the industry continues to be cutthroat; HBO and Amazon.com ( AMZN) aren’t going anywhere, and continue to create their own award- and eyeball-winning content. In CEO Reed Hastings’ mind, anyone that takes away screen time from Netflix is a competitor, which makes the competitive landscape rather large and implies rivalries between other Silicon Valley hotshots like Facebook ( FB), Alphabet ( GOOG, GOOGL), Twitter ( TWTR) and Snap ( SNAP).

What’s certain is that companies with cable assets definitely consider Netflix a competitor, with shares of both Walt Disney Co. ( DIS) and AT&T ( T) recently suffering due to subscriber losses as a result of trends like cord-cutting. It could be that competition that inspired Disney to announce it will no longer license new Disney releases to Netflix, beginning in 2019, opting to start its own streaming service instead.

“It will be interesting to hear what Netflix may be willing to share about their plans for content post-Disney. Netflix has a strong content engine, but it’s hard to match the strength of Disney’s content as a hook for subscribers,” Portell says.

[Read: 5 of the Best Stocks to Buy for October.]

Sure, the company’s Q3 report isn’t quite the earth-mover the NFLX Q2 2017 earnings report was, but at least shareholders know one thing: Netflix never fails to entertain.

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Netflix (NFLX) Stock Advances After Q3 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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