Netflix shares prices dropped dramatically even after posting higher than expected sales in the third quarter results. The key reasons for this are the increase in the number of subscribers below the estimate and the currency revaluation of the Eurobonds, resulting in lower revenues. The stock is down 15 percent in presence of a favorable current situation with active growth opportunities.
To better tackle the second coronavirus wave, quarantine has already resumed in European region including Germany, Great Britain and France, while the number of people infected in the United States continues to rise. Although the vaccine is still unavailable ahead of the approaching winter, which means more people will be staying at home and use Netflix. Since release of its last outlook, situation of the pandemic has worsened significantly, this raises the need of revising the targets. The number of subscribers rose by almost 26 million in the first half of 2020.
In addition, Netflix plans to boost U.S. subscription costs as the service is much cheaper than cable television. So it is unlikely to notice a rise in tariffs for a dollar or two, but it will result in fueling the North American revenue growth up. The number of U.S. subscribers exceeds 65 million, so Netflix’s annual revenue will increase by at least $780 million.
Wall Street is projected to see shares rising to $545, but may likely want to update their estimates to reflect shifts in the pricing strategy of Netflix.
Also the German carmaker BMW published a report on the performance of its operations for 9 months of this year. The company reported a decline in net profit to EUR2.1 billion, which is almost 1.7 times less than that posted by the company in the first nine months of previous year.
Earnings per share declined to 2.17 euros from 3.20 euros. Revenue dropped year-on-year by 7.1 percent to 69.5 billion euros. During the reported quarter, 1.638 million vehicles were put on the market by the automaker, 12.5 percent less than the number of deliveries made by the company a year earlier. In the supply of Rolls-Royce cars, the largest decrease was recorded which was 28.5 percent.
The third quarter results indicate some improvement in the situation at BMW. Profits climbed 17.4 percent to EUR 1.8 billion. It rose by 0.40 euros per share to 2.71 euros. At the same time, sales for the quarter decreased by 1.4 percent to EUR 26.3 billion. Car deliveries to the industry rose to 676,000 units to mark rise of 8.6 percent.
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