Netflix

Netflix (NFLX) just set a powerful tone with the kick-off of the technology sector earnings season. The company blew away subscriber net additions with 5.2 million, with most investors looking for net adds around 3.2 million. The international growth was incredible at 4.14 million, while the US saw 1.07 million additions. The company noted in its release the US reading was the highest since the second quarter of 2011.  For the third quarter, the company is looking for total net adds of 4.4 million. Additionally, the company issued third quarter guidance well ahead of analyst estimates. According to Ycharts, analysts had been looking for EPS of $0.22 and revenue of $2.86 billion. The company guided for EPS of $0.32 and revenue of $2.969 billion.

These results and guidance led to an 11 percent jump in the share price to an all-time around $179.

Subscriber Growth

For Netflix, though this may only really be the start of their international subscriber growth ramping up.

Based on previous trends and projection based on those trends, the company could reach 70 million international subscribers over the next 4 quarters, and total subscribers of nearly 130 million by the second quarter of 2018.

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Technology Sector

At this point, the Technology sector has recouped most of its loss suffer over the Technology Meltdown two weeks ago.

XLK data by YCharts

Netflix Sets The Sentiment

If the Netflix results are a sign of the future results to come, then this sector could have much further run.

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Disclaimer:

Michael Kramer and the Clients of Mott Capital own shares of NFLX.

Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendation made during the past twelve months. Past performance is not indicative of future performance.