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Netflix Keeps Burning Cash

International subscribers boosted growth, but we still think the firm will have to spend heavily over time to fend off competition.

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Neil Macker: Netflix posted stronger than expected subscriber guidance in the third quarter as the company beat its own weak guidance by roughly 2 million subscribers. The company now has over 130 million subscribers globally, as it continues to expand its global subscriber base. Growth is still being driven internationally, as the company now has almost over 80 million subscribers outside of the US. 

Despite the subscriber gain, Netflix continues to burn cash, as the loss reached almost $860 million in the quarter. The company continues to expect a $3 billion loss for the full year and expects that level to continue in 2019. While the company expects an inflection point in 2020, we do note that increasing competition from not only Disney but possibly launches by Warner Media, Apple, and Walmart should increase the amount of competition. This increased competition may force the company to continue spending on original content. 

Neil Macker does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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