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The earnings season is off to a good start and investors expect better-than-expected results to overshadow geopolitical risks. Netflix (NFLX) shares rallied following the announcement of first-quarter 2018 results, as the company came up with better-than-expected subscriber growth and revenues.
Q1 Performance
This Internet television streaming network added 7.41 million subscribers in the first quarter, much higher than its target of 6.35 million. Out of the 7.41 million net additions, 1.96 million were domestic while 5.46 were international. Shares of Netflix were up 5.2% in afterhours trading owing to the encouraging numbers.
The streaming giant reported first-quarter earnings of 64 cents per share, above the Zacks Consensus Estimate of 63 cents and higher than 40 cents reported in the year-ago quarter. Moreover, the company reported revenues of $3.70 billion, beating the Zacks Consensus Estimate of $3.69 billion. Netflix reported a significant year-over-year increase in revenues of 40.7%. It had recorded $2.63 billion in revenues in the year-ago quarter.
The company currently has 125 million total subscribers, of which American consumers make up 56.71 million while international consumers make up the remaining 68.29 million memberships.
Netflix expects revenues to increase to $3.93 billion in the second quarter and EPS to increase to 79 cents. Moreover, it expects total subscribers to reach 131.2 million by the end of the second quarter, with 1.2 million domestic additions and 5 million international additions. The company also stated that it expects to spend $7.5-8 billion in 2018 on new series, movies and comedy specials. .Shares of Netflix have rallied 53.1% so far this year and stock has a Zacks Rank #2 (Buy).
First Trust ISE Cloud Computing Index Fund (SKYY - Free Report)
SKYY is a bet on the cloud computing segment of the technology sector. This fund has AUM of $1.4 billion and charges a fee of 60 basis points a year. The fund has 6.9% exposure to Netflix. The fund has returned 29.8% in a year and 7.6% year to date. SKYY has a Zacks ETF Rank #3 (Hold), with a Medium risk outlook.
This fund provides exposure to the Internet segment of the U.S. technology sector. It has AUM of $585.4 million and charges a fee of 60 basis points a year. The fund has 8.9% exposure to Netflix. The fund has returned 34.5% in a year and 7.7% year to date. PNQI has a Zacks ETF Rank of #3, with a High risk outlook.
First Trust Dow Jones Internet Index (FDN - Free Report)
This fund is one of the most popular bets in the Internet segment of the U.S. technology sector. It seeks to invest in companies that derive at least 50% of its revenues from the Internet. It has AUM of $7.0 billion and charges a fee of 54 basis points a year. The fund has 6.0% exposure to Netflix. The fund has returned 39.1% in a year and 10.1% year to date. FDN currently has a Zacks ETF Rank of #2, with a High risk outlook.
Below is a year to date chart comparing the performance of the 3 ETFs discussed and Netflix.
Source: Yahoo Finance
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ETFs to Buy on Netflix's Blockbuster Q1 Earnings
The earnings season is off to a good start and investors expect better-than-expected results to overshadow geopolitical risks. Netflix (NFLX) shares rallied following the announcement of first-quarter 2018 results, as the company came up with better-than-expected subscriber growth and revenues.
Q1 Performance
This Internet television streaming network added 7.41 million subscribers in the first quarter, much higher than its target of 6.35 million. Out of the 7.41 million net additions, 1.96 million were domestic while 5.46 were international. Shares of Netflix were up 5.2% in afterhours trading owing to the encouraging numbers.
The streaming giant reported first-quarter earnings of 64 cents per share, above the Zacks Consensus Estimate of 63 cents and higher than 40 cents reported in the year-ago quarter. Moreover, the company reported revenues of $3.70 billion, beating the Zacks Consensus Estimate of $3.69 billion. Netflix reported a significant year-over-year increase in revenues of 40.7%. It had recorded $2.63 billion in revenues in the year-ago quarter.
The company currently has 125 million total subscribers, of which American consumers make up 56.71 million while international consumers make up the remaining 68.29 million memberships.
Netflix expects revenues to increase to $3.93 billion in the second quarter and EPS to increase to 79 cents. Moreover, it expects total subscribers to reach 131.2 million by the end of the second quarter, with 1.2 million domestic additions and 5 million international additions. The company also stated that it expects to spend $7.5-8 billion in 2018 on new series, movies and comedy specials. .Shares of Netflix have rallied 53.1% so far this year and stock has a Zacks Rank #2 (Buy).
Here are some ETFs that focus on providing exposure to Netflix (see all Technology ETFs here).
First Trust ISE Cloud Computing Index Fund (SKYY - Free Report)
SKYY is a bet on the cloud computing segment of the technology sector. This fund has AUM of $1.4 billion and charges a fee of 60 basis points a year. The fund has 6.9% exposure to Netflix. The fund has returned 29.8% in a year and 7.6% year to date. SKYY has a Zacks ETF Rank #3 (Hold), with a Medium risk outlook.
PowerShares NASDAQ Internet Portfolio (PNQI - Free Report)
This fund provides exposure to the Internet segment of the U.S. technology sector. It has AUM of $585.4 million and charges a fee of 60 basis points a year. The fund has 8.9% exposure to Netflix. The fund has returned 34.5% in a year and 7.7% year to date. PNQI has a Zacks ETF Rank of #3, with a High risk outlook.
First Trust Dow Jones Internet Index (FDN - Free Report)
This fund is one of the most popular bets in the Internet segment of the U.S. technology sector. It seeks to invest in companies that derive at least 50% of its revenues from the Internet. It has AUM of $7.0 billion and charges a fee of 54 basis points a year. The fund has 6.0% exposure to Netflix. The fund has returned 39.1% in a year and 10.1% year to date. FDN currently has a Zacks ETF Rank of #2, with a High risk outlook.
Below is a year to date chart comparing the performance of the 3 ETFs discussed and Netflix.
Source: Yahoo Finance
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>