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Published: Wed, October 19, 2016
Medical | By Garry George

Netflix nixes China for now, earnings double estimates, stock soars

Netflix nixes China for now, earnings double estimates, stock soars

Netflix shares soared in after-hours trading Monday as the video streaming service reported adding almost 3.6 million subscribers in the third quarter.

Streaming giant Netflix now has 86.74 million subscribers after adding 3.2 million overseas and 370,000 in the USA during the third quarter.

Netflix added over 3.2 million new worldwide subscribers for the three-month period, compared to a 2 million guidance.

When it released second-quarter earnings, Netflix had forecast adding 2.6 million streaming subs overall - 300,000 in the USA and 2.3 million internationally.

"In Q3, quarterly global streaming revenue exceeded $2 billion for the first time (up 36 percent year over year), helped by our strong content slate including Stranger Things and the second season of Narcos", the company said in a statement (pdf). Netflix, based in Los Gatos, California, had blamed a price increase for slower growth earlier this year. The subscription video-on-demand leader announced that it added 370,000 subscribers in the United States and 3.2 million internationally.

It's no secret that Netflix is doing pretty well these days, with the video streaming service becoming a household name thanks chiefly to it's impressive lineup of original content. The streaming service only netted about 300,000 new subscribers, according to the report. Wall Street's forecasted 304,000 USA subscriber growth compared to the reported 370,000. The stock is up more than 3 percent year to date.

The company, which started as a DVD rental firm in 1977, has been expanding in global markets to counter slowing growth in the United States. Netflix attributed the growth to buzz around shows like "Stranger Things" and "Narcos". This will be a near-tern solution, with licensing revenues expected to be modest.

600 hours of original programming will be released by Netflix by the end of 2016, with the company planning to release over 1,000 hours next year.

As for China, Netflix said it has no immediate plans to enter the country. The investor's letter noted, "the regulatory environment for foreign digital content services in China has become challenging".

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