After missing subscriber expectations in 2Q, investors are debating whether Netflix NFLX +4.02% can beat now-lowered expectations heading into 3Q results on Oct. 16. Consensus data from Visible Alpha calls for 129.5 million paid subscribers in 3Q, a downward revision of 1.2 million from expectations prior to 2Q results.
One reason investors believe the company could potentially beat expectations is the strong slate of recent releases. In 3Q, Netflix released new episodes in series like “Orange is the New Black,” “Maniac,” and “Bojack Horseman,” which may have helped drive new subs.
Investors are also hopeful that International can help drive out-performance. It’s no secret that the International segment has been the primary growth driver for Netflix. In 4Q17, the International segment surpassed the U.S. segment in paid subscribers (as shown in the figure below). International is also expected to add roughly 4x as many paid subscribers as the U.S. segment going forward. Visible Alpha consensus expectations are for 4.4 million net adds for International and 0.7 million net adds for U.S. – both roughly in line with company guidance for 4.35 million paid subscriber net adds in International and 0.65 million paid subscriber net adds in the U.S.
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