Netflix's stock flop: Is streaming passed its peak?
Netflix reported strong revenue and profit growth, yet its stock price fell significantly due to investor concerns over slowing growth rates. The market is prioritizing consistent acceleration in expansion over absolute profitability.
Why it matters
It highlights the stock market's tendency to punish even highly profitable companies if their growth trajectory fails to meet aggressive investor expectations.
If you were to cast an eye on Netflix's latest financial results, you’d be forgiven for thinking that everything was going quite well for the streaming giant.
The company took in revenues of more than $12.5 billion in the three months to the end of June. That’s up 13.4% year-on-year.
From that, it recorded a profit of $4.2 billion - about 11% higher year-on-year. Bear in mind, that’s a multi-billion dollar profit in a mere three months.
In the twelve months to the end of June, the company booked a profit of more than $14.3 billion.
At a time when traditional media companies are struggling to survive - and everything that isn’t a Nolan epic or a web-slinger is struggling at the box office - Netflix is absolutely raking in it. And how much it’s raking in is growing all the time.
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