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Netflix (NFLX - Free Report) reported solid third-quarter 2023 results after the closing bell on Wednesday. The world's largest video-streaming company topped both earnings and revenue estimates. It posted its best quarter in terms of subscriber growth in years.
The robust numbers came despite the strikes by Hollywood writers and actors that brought the entertainment industry largely to a standstill. Netflix shares spiked as much as 13% in after-hours trading. Investors could easily tap the strength through ETFs with the largest allocation to this streaming giant. These funds include MicroSectors FANG+ ETN (FNGS - Free Report) , Vanguard Communication Services ETF (VOX - Free Report) , Fidelity Disruptive Communications ETF (FDCF - Free Report) , Pacer BioThreat Strategy ETF (VIRS - Free Report) and First Trust S-Network Streaming & Gaming ETF (BNGE - Free Report) .
Q3 Earnings in Detail
The company reported earnings per share of $3.73, which outpaced the Zacks Consensus Estimate by 27 cents and improved from the year-ago earnings of $3.10. Revenues rose 7.8% year over year to $8.54 billion and were slightly above the estimate of $8.53 billion. The new round of price hikes bolstered revenue growth.
Netflix raised subscription prices for some of its streaming plans in the United States, Britain and France. It increased the U.S. price of the premium ad-free plan by $3 per month to $22.99 and the one-stream basic plan by $2 per month (read: 5 Best-Performing Sector ETFs of Nine Months).
The streaming giant added 8.8 million subscribers in the third quarter, taking the global membership to 247.15 million subscribers. This marks the biggest quarterly net additions since the second quarter of 2020. The growth was fueled by a recent crackdown on password-sharing and a steady flow of new programming, such as the romance movie "Love at First Sight" and Japanese series "One Piece."
Netflix anticipates paid net subscriber additions in the fourth quarter to be similar to the third quarter. For the next few months, Netflix has an exceptionally strong fall/winter schedule, including the final season of The Crown, Berlin, Squid Game: The Challenge, Rebel Moon and new movies Maestro, The Killer, Rustin and Society of the Snow.
The streaming giant expects revenues to grow 11% to $8.69 billion and earnings per share of $2.15 for the fourth quarter. The Zacks Consensus Estimate is pegged at $8.77 billion for revenues and $2.21 for earnings per share.
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar-weighted index. It is designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in its basket in equal proportion, with Netflix’s share coming in at 10% (read: 5 ETFs That Are Up More Than 40% So Far This Year).
MicroSectors FANG+ ETN has accumulated $133.3 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 182,000 shares a day on average and has a Zacks ETF Rank #3 (Hold).
Vanguard Communication Services ETF also targets the communication service sector by tracking the MSCI US Investable Market Communication S2ervices 25/50 Index. Holding 117 stocks in its basket, Netflix takes the seventh spot with a 4.1% share. Interactive media & services is the top sector, accounting for 48.6% of the portfolio, while movies & entertainment, integrated telecommunication services, and cable & satellite round off the next three.
Vanguard Communication Services ETF has AUM of $3.4 billion and trades in a good volume of 150,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
Fidelity Disruptive Communications ETF seeks exposure to securities of disruptive communications companies engaged in social media, next-generation digital infrastructure, and connected devices (e.g., 5G communications, cloud networking). It holds 42 stocks in its basket, with Netflix taking the sixth spot at 5.1%. Communication services takes the largest share at 49.2%, followed information technology, which has 32.3% share.
Fidelity Disruptive Communications ETF has amassed $38.1 million in its asset base and trades in a volume of 1,000 shares per day on average. It charges 50 bps in annual fees.
Pacer BioThreat Strategy ETF seeks exposure to U.S. companies that provide their goods and services to the market by accomplishing one or more of the seven index themes. It tracks the LifeSci BioThreat Strategy Index, holding 53 stocks in its basket. Netflix occupies the 12th position with 4.3% of the assets.
Pacer BioThreat Strategy ETF has accumulated $3.8 million in its asset base and charges 70 bps in annual fees. It trades in a paltry average daily volume of 200 shares and has a Zacks ETF Rank #3.
First Trust S-Network Streaming & Gaming ETF tracks the S-Network Streaming & Gaming Index and holds 44 stocks in its basket. Netflix is the 11th firm, accounting for 4.1% of the assets. From a sector look, entertainment takes the largest share at 43.6% while hotels, restaurants & leisure, interactive media & services and semiconductors & semiconductor equipment round off the next three spots with double-digit exposure each.
First Trust S-Network Streaming & Gaming ETF has accumulated $4.3 million in its asset base and trades in an average daily volume of under 1,000 shares. It charges 70 bps in annual fees.
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ETFs to Buy on Netflix's Blowout Q3 Earnings
Netflix (NFLX - Free Report) reported solid third-quarter 2023 results after the closing bell on Wednesday. The world's largest video-streaming company topped both earnings and revenue estimates. It posted its best quarter in terms of subscriber growth in years.
The robust numbers came despite the strikes by Hollywood writers and actors that brought the entertainment industry largely to a standstill. Netflix shares spiked as much as 13% in after-hours trading. Investors could easily tap the strength through ETFs with the largest allocation to this streaming giant. These funds include MicroSectors FANG+ ETN (FNGS - Free Report) , Vanguard Communication Services ETF (VOX - Free Report) , Fidelity Disruptive Communications ETF (FDCF - Free Report) , Pacer BioThreat Strategy ETF (VIRS - Free Report) and First Trust S-Network Streaming & Gaming ETF (BNGE - Free Report) .
Q3 Earnings in Detail
The company reported earnings per share of $3.73, which outpaced the Zacks Consensus Estimate by 27 cents and improved from the year-ago earnings of $3.10. Revenues rose 7.8% year over year to $8.54 billion and were slightly above the estimate of $8.53 billion. The new round of price hikes bolstered revenue growth.
Netflix raised subscription prices for some of its streaming plans in the United States, Britain and France. It increased the U.S. price of the premium ad-free plan by $3 per month to $22.99 and the one-stream basic plan by $2 per month (read: 5 Best-Performing Sector ETFs of Nine Months).
The streaming giant added 8.8 million subscribers in the third quarter, taking the global membership to 247.15 million subscribers. This marks the biggest quarterly net additions since the second quarter of 2020. The growth was fueled by a recent crackdown on password-sharing and a steady flow of new programming, such as the romance movie "Love at First Sight" and Japanese series "One Piece."
Netflix anticipates paid net subscriber additions in the fourth quarter to be similar to the third quarter. For the next few months, Netflix has an exceptionally strong fall/winter schedule, including the final season of The Crown, Berlin, Squid Game: The Challenge, Rebel Moon and new movies Maestro, The Killer, Rustin and Society of the Snow.
The streaming giant expects revenues to grow 11% to $8.69 billion and earnings per share of $2.15 for the fourth quarter. The Zacks Consensus Estimate is pegged at $8.77 billion for revenues and $2.21 for earnings per share.
ETFs in Focus
MicroSectors FANG+ ETN (FNGS - Free Report)
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar-weighted index. It is designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in its basket in equal proportion, with Netflix’s share coming in at 10% (read: 5 ETFs That Are Up More Than 40% So Far This Year).
MicroSectors FANG+ ETN has accumulated $133.3 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 182,000 shares a day on average and has a Zacks ETF Rank #3 (Hold).
Vanguard Communication Services ETF (VOX - Free Report)
Vanguard Communication Services ETF also targets the communication service sector by tracking the MSCI US Investable Market Communication S2ervices 25/50 Index. Holding 117 stocks in its basket, Netflix takes the seventh spot with a 4.1% share. Interactive media & services is the top sector, accounting for 48.6% of the portfolio, while movies & entertainment, integrated telecommunication services, and cable & satellite round off the next three.
Vanguard Communication Services ETF has AUM of $3.4 billion and trades in a good volume of 150,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
Fidelity Disruptive Communications ETF (FDCF - Free Report)
Fidelity Disruptive Communications ETF seeks exposure to securities of disruptive communications companies engaged in social media, next-generation digital infrastructure, and connected devices (e.g., 5G communications, cloud networking). It holds 42 stocks in its basket, with Netflix taking the sixth spot at 5.1%. Communication services takes the largest share at 49.2%, followed information technology, which has 32.3% share.
Fidelity Disruptive Communications ETF has amassed $38.1 million in its asset base and trades in a volume of 1,000 shares per day on average. It charges 50 bps in annual fees.
Pacer BioThreat Strategy ETF (VIRS - Free Report)
Pacer BioThreat Strategy ETF seeks exposure to U.S. companies that provide their goods and services to the market by accomplishing one or more of the seven index themes. It tracks the LifeSci BioThreat Strategy Index, holding 53 stocks in its basket. Netflix occupies the 12th position with 4.3% of the assets.
Pacer BioThreat Strategy ETF has accumulated $3.8 million in its asset base and charges 70 bps in annual fees. It trades in a paltry average daily volume of 200 shares and has a Zacks ETF Rank #3.
First Trust S-Network Streaming & Gaming ETF (BNGE - Free Report)
First Trust S-Network Streaming & Gaming ETF tracks the S-Network Streaming & Gaming Index and holds 44 stocks in its basket. Netflix is the 11th firm, accounting for 4.1% of the assets. From a sector look, entertainment takes the largest share at 43.6% while hotels, restaurants & leisure, interactive media & services and semiconductors & semiconductor equipment round off the next three spots with double-digit exposure each.
First Trust S-Network Streaming & Gaming ETF has accumulated $4.3 million in its asset base and trades in an average daily volume of under 1,000 shares. It charges 70 bps in annual fees.