Short sellers lost $700 million in the wake of very strong Q2 earnings for Netflix Inc. (NASDAQ:NFLX). The earnings revealed that Netflix had added 5.2 million subscribers. Analysts have turned even more bullish on the stock, some pushing its price target beyond $220.
Netflix announced $0.15 earnings per share which were in line with expectations on Wall Street. Revenue was reported at $2.78 billion, up 32.3% year-over-year – beating Wall Street projections. Projections for Q3 are hovering around $2.9 billion with subscribers expected to grow by over 4 million.
The growth in U.S. subscriptions represented perhaps the most shocking element of the earnings report. The substantial growth was in line with numbers seen in 2014 and 2015, when the consumer base for Netflix was not nearly as large as it is now. These new numbers suggest that Netflix still has potential for massive and sustained growth. There are no 50 million paying Netflix subscribers in the United States – equivalent to 15% of the country’s population.
On Wednesday Netflix closed at $189.08 – up 1.13%. Netflix has aggressively pursued creation of original content for its subscribers, and this strategy is clearly paying off thus far. It still faces competition from other original content producers like Amazon, Facebook, and others. However, so far none of these providers have managed to come close to the quality and quantity that Netflix has brought to the table.
