Netflix’s 2Q 2017 results surpassed subscriber expectations as the online streaming service added 5.2 million subscribers globally (4.1 million in international markets and 1.1 million in the U.S. market).

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It now has 52 million subscribers in its international markets surpassing the U.S. total and will begin being profitable this year despite having to invest US$6 billion in licensed and original programming this year alone.

As such, the company will remain cash flow negative (and likely be so for several years to come as it has committed US$15.7 billion to programming over the next few years). Its net profit after tax of US$66 million also fell short of analysts’ expectations on revenue of US$2.8 billion. For the 3Q 2017, Netflix is guiding for almost US$3 billion and about 4.4 million new subscribers.

For now, it appears that investors are not too worried about the company’s profitability or cash flow burn as shares climbed over 10% in the aftermarket trading, bringing its valuation to even loftier levels of 6x 2018 revenue and over 90x 2018 price / earnings.

About Kevin Hua

Kevin Hua is a Co-Founder of AtlasTrend, an online investment platform that makes it easy for anyone to learn and invest in trends transforming our world. Kevin has over 19 years experience in financial markets including as Senior Portfolio Manager at Atrium Investment Management and Stark Investments.

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