Netflix +11% on Q4 Earnings Miss, Net Adds Up

Mark Vickery Published on January 19, 2021

The Dow Jones has snapped a three-day losing streak by Tuesday’s regular trading close, gaining 116 points (+0.38%) on the day. The blue-chip 30 was led by a strong showing from Boeing (BA - Free Report) , which announced it will be returning its 737 MAX jet to commercial flights in Canada and the European Union. The S&P 500 and the Nasdaq both closed higher for the first time in three sessions, up 0.81% and 1.53%, respectively — enough for a new record high close for the tech-heavy Nasdaq.

And this comes prior to the Q4 earnings report from Netflix (NFLX - Free Report) released after the closing bell, which has sent late-trading for the streaming giant up 11%. This comes on a bottom-line negative surprise for Netflix — its fourth straight earnings miss — to $1.19 per share from the $1.38 expected. Revenues of $6.64 billion in the quarter was only modestly better than the $6.62 billion in the Zacks consensus. So what led to such a big upswing in the after-market?

Try this on for size: Net Adds in the quarter of 8.5 million were 33% higher than the 6.4 million expected. These figures had been softening a bit as the lockdown period of the pandemic waned last summer, but was nevertheless a positive development.

Even soft guidance for net added subscribers in the current quarter, back down to around 6 million, couldn’t quell the bullishness. Netflix’s announcement that it expects to be cash-flow neutral this year and positive every year beyond also brings to mind the good old days when Netflix issued a dividend.

On the conference call, additional questions regarding potential price increases and new content production will likely receive answers. Netflix carried a Zacks Rank #3 (Hold) into the earnings report, with a Value-Growth-Momentum grade of B. The stock is up 164% from this time last year.

On Wednesday, we see another full plate of consequential names from a wide spectrum of industries reporting earnings, including Procter & Gamble (PG - Free Report) , Morgan Stanley (MS - Free Report) , United Airlines (UAL - Free Report) and UnitedHealthcare (UNH - Free Report) . As of last week, Zacks Director of Research Sheraz Mian had said Q4 earnings season had gotten off to a great start; we shall see if this continues through this week and beyond.

Questions or comments about this article and/or its author? Click here>>

Legal Marijuana: An Investor’s Dream

Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.

Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.

Download Marijuana Moneymakers FREE >>

Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.