Netflix stock sinks despite strong subscriber growth in Q1

Netflix Inc (NASDAQ: NFLX) is trading down in extended hours on Thursday even though it reported market-beating financial results for its first quarter.

Netflix reports a 16% growth in subscribers

The price action is interesting considering the mass media behemoth topped Street estimates for net new subscribers as well.

$NFLX ended its Q1 with 269.6 million subscribers in total – well above $264.21 million that experts had forecast. Its letter to shareholders reads:

Wall Street currently has a consensus “overweight” rating on Netflix stock that’s still up more than 25% versus the start of 2024.

$NFLX guidance for full fiscal 2024

Note that Netflix Inc also issued a good enough guidance for the future on Thursday.

The streaming giant now forecasts up to a 15% annualised increase in revenue this year on operating margin at 25%, as per its earnings report. According to $NFLX:

For its current quarter, the Nasdaq-listed firm forecasts a further growth in revenue to $9.49 billion on $4.68 of per-share earnings. Analysts, in comparison, were at $4.54 a share. Note that Netflix stock do not currently pay a dividend.

Netflix Q1 earnings snapshot

• Earned $2.33 billion versus the year-ago $1.30 billion
• Per-share earnings also improved from $2.88 to $5.28
• Revenue climbed 14.7% year-over-year to $9.37 billion
• Consensus was $4.52 a share on $9.28 billion in revenue

Netflix said its operating margin stood at a whopping 28.1% in the first quarter versus 21% a year ago. What's weighing on shares of the $265 billion company based out of Los Gatos, California this evening, however, is perhaps the following statement:

You can read $NFLX's full letter to shareholders on this link.