The past month or two has been a bumpy ride for DVD company Netflix, Netflix Investors, and for Netflix subscribers. Tonight, things got real bumpy for NFLX investors. Netflix announced third quarter earnings after the bell today, and actually surprised on the upside, with revenue that beat expectations as well as higher than expected profits.
But don’t go cheering just yet….While Netflix’s 3Q numbers were better than expected, the company announced that fourth quarter DVD Subscribers would fall sharply. Naturally, this has caused a sudden free fall in the NFLX shares in after hours trading with the price currently down $25.30 or 21%. Ouch.
Netflix reported revenue of $822 million in the third quarter, an increase of 49% over the same period last year. Earnings per share were $1.16 on net income of $62 million. This compares to analyst consensus of 94 cents per share earnings and $811 Million in Revenue.
So the million dollar question: Is Netflix (NFLX) now a buy after getting a serious hair cut today? It’s likely too early to tell, but we will go out on a limb and say that it could very well be a buy. Either way, Netflix is a great trading stock, with it’s small number of outsanding shares and 95% institutional ownership. You can make a living trading on it’s huge and sudden price swings.
You can also buy and hold Netflix at these levels, as the company is a winner and a leader in it’s industry, and we bet it will bounce back nicely from all the negative news of late.
* This is just our opinion! Do not buy based on it. You should come up with your own opinion after doing your own research.