Netflix Survives Its Most Challenging Quarter
If there was ever a time for Netflix (NASDAQ: NFLX) to prove mortal, it should've been during Tuesday afternoon's fourth-quarter report. The arrival of Disney's (NYSE: DIS) new streaming service midway through the quarter gave the leading streaming service its biggest challenger to date. Netflix's own forecasts were also called into question since it had fallen short of its subscriber guidance in the two previous quarterly outings.
Netflix came through in a major way this week. Tuesday afternoon's earnings release won't technically be called a blowout quarter, as the imperfections were everywhere. Year-over-year revenue growth slowed after back-to-back quarters of acceleration. Operating margin contracted sequentially at a clip more severe than Netflix had been suggesting three months earlier. Free cash flow was a 10-digit hole. Domestic growth has slowed to a crawl. However, Netflix came out swinging in the areas where it really needed a hit -- and things should get better from here.
Image source: Netflix.
Source Fool.com
