NEW YORK – Netflix has proved again that it has a way of triggering a Pavlovian response from its shareholders.
The video-streaming service on Monday unveiled second-quarter results that show it added more subscribers than expected. It also grew operating income faster than revenue.
That sent shares soaring, even though expected profitability falls a long way short of being able to justify the stock’s fairy tale multiple.
The company lead by Reed Hastings blew past subscriber forecasts, racking up more than one million net additions in the US and about four million additions internationally.
All told, Netflix has 103 million customers worldwide.
Operating income is forecast to almost double to $US204 million ($F414m) during the third quarter compared to the same period last year.
That’s on top of growing, at 83 per cent, almost three times as fast as the top line in the three months to June.
In after-hours trading on Monday, after the results were released, shares shot up about 11 per cent.
Yet Netflix burned through $US608m ($F1.2 billion) of cash during the second quarter, 44 per cent higher than in the prior quarter.
It’s expected to set ablaze up to $US2.5b ($F5b) for the full year and expects free cash flow to be negative for “many years,” it told shareholders on Monday.
