Netflix shares up on Q2 results: ‘you have to think about buying this stock’

on Jul 19, 2022
Updated: Jul 20, 2022
  • Netflix lost about half as many subscribers in Q2 as it had forecast.
  • Joe Terranova discussed Netflix Q2 results on CNBC's "Closing Bell".
  • Netflix shares are up nearly 10% in after-hours trading on Tuesday.

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Shares of Netflix Inc (NASDAQ: NFLX) are up nearly 10% in extended trading after the streaming giant said it did not lose as many subscribers in its fiscal second quarter as it had forecast earlier.

Notable figures in Netflix Q2 results

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  • Lost 970,000 paid subscribers versus 2.0 million expected
  • Net earnings printed at $1.6 billion, up 7.0% year-over-year
  • Per-share earnings of $3.20 were ahead of last year’s $2.97
  • Revenue saw an annualised growth of 9.0% to $7.97 billion
  • FactSet consensus was for $2.95 of EPS on $8.03 billion in sales

A day earlier, Netflix said its customers will soon be restricted to use their accounts in one designated home only. For each new home, it’ll charge an additional $2.99. The new policy will apply to Latin America first and will eventually be cloned through the rest of its markets.

Netflix to win back its lost subscribers

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More importantly, Netflix is committed to winning its subscribers back, as per its letter to shareholders. In the current financial quarter, the streaming company hopes to add 1 million paid subscribers and generate $7.84 billion in revenue.

The forecast, however, was still below Street estimates for 1.4 million net additions on $8.09 billion in revenue. Operating margin is expected to stand at 19% to 20% this year.

Joe Terranova reacts to the earnings report

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Discussing the earnings report on CNBC’s “Closing Bell: Overtime”, Virtus Investment Partners’ Joe Terranova said:

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You have to think about buying this stock. This is not a value trap. It’s a stock that’s exhibiting itself to be a value story, but growth has the potential to return once again. I’d expect it to rally towards $275 in a better market.

According to Netflix, revenue took a $339 million hit on foreign currency impact this quarter. NFLX is currently trading at trailing 12-month price-to-earnings ratio of 18.30.

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