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Netflix (NFLX) Strengthens APAC Footprint With New Initiatives

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Netflix (NFLX - Free Report) is strengthening its footprint in the Asia Pacific ("APAC") region, with a plethora of content and initiatives that support creativity. The company’s efforts to bolster its APAC content portfolio have been a major growth driver.

In second-quarter 2023, APAC’s paid subscriber base increased 16.5% year over year to 40.55 million, adding 1.07 million new paid subscribers. In comparison, the subscriber base in the United States and Canada (“UCAN"), Europe, Middle East & Africa and Latin America increased 3.1%, 9.4% and 7.2%, on a year-over-year basis, respectively.

As part of its expansion strategy in the APAC region, the streaming giant recently announced the sponsorship of a program that aims at discovering and nurturing the next generation of Vietnamese filmmakers. The program will be led by Chanh Phuong Films.

Moreover, Netflix continues to expand its Korean content portfolio with a new documentary, Yellow Door: ’90s Lo-fi Film Club, which will offer a glimpse into the journey of Korean cinephilia in the 1990s. Directed by Lee Hyuk-rae, the documentary will be available on Netflix on Oct 27.

Korean content has been a major growth driver for Netflix. It is adding an array of Korean originals to its portfolio, including Mask Girl, Behind Your Touch and Destined With You. It recently confirmed the production of Aema, a Korean original series following the struggles of Hui-ran and Joo-ae in creating the 1980s hit film Madame Aema, set in 80s Chungmuro.

Apart from Korean shows, Netflix is expanding its footprint in India through partnerships with the likes of Yash Raj Films and acclaimed director Neeraj Pandey’s Friday Storytellers LLP, the digital content production arm of Friday Filmworks.

Netflix Riding on Strong Foreign Language Content

Netflix’s strong foreign language content portfolio has been a key catalyst in driving share price performance. Shares of this Zacks Rank #3 (Hold) company have returned 30.5% compared with the Zacks Consumer Discretionary sector’s increase of 4.2% year to date. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company has been suffering from intensified competition and a saturated market in its largest region, UCAN. Among its closest peers, Netflix has outperformed Disney (DIS - Free Report) but underperformed Amazon (AMZN - Free Report) and Apple (AAPL - Free Report) year to date.

While Disney shares have declined 6.8%, shares of Amazon and Apple have returned 56.3% and 35.5%, respectively, on a year-to-date basis.

Netflix now expects revenue growth to accelerate in the second half of 2023, driven by the launch of the paid sharing initiative and an expanding content offering.

For the third quarter of 2023, Netflix now forecasts earnings of $3.52 per share, indicating an almost 10% increase from the figure reported in the year-ago quarter. Total revenues are anticipated to be $8.52 billion, suggesting growth of 7% year over year and on a forex-neutral basis.

The Zacks Consensus Estimate for Netflix's third-quarter revenues is pegged at $8.53 billion, indicating 7.59% year-over-year growth. The consensus mark for earnings increased by a penny over the past 30 days to $3.49 per share.

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