Why You Shouldn't Count Netflix, Inc. (NASDAQ:NFLX) Out Just Yet

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Netflix, Inc. (NASDAQ:NFLX) stock fell today after an earnings report noted subscriber growth fell short of expectations. After it's massive surge in the past year, doubling in price since January, expectations are at an all-time high for the company and growth appears to be slowing. The news drove the price from the low 400 USD range down to around 372 USD. Needless to say, the most recent buyers felt quite a bit of pain. Some analysts are even saying that Netflix, Inc. (NASDAQ:NFLX) is on track for it's worst day ever.

Netflix, Inc. (NASDAQ:NFLX) Belak Earnings

After an estimated subscriber growth of 6.2 million new users was set in April, reality checked in with a new user growth just at 5 million, falling 1.2 million short of Netflix, Inc. (NASDAQ:NFLX) goal. This was the key figure in the report that drove stock prices down, but there were other factors as well. One such factor was Netflix, Inc. (NASDAQ:NFLX) expressing caution when it came to its up and coming competition, such as Alphabet Inc (NASDAQ:GOOGL) and Apple INC. (NASDAQ:AAPL), and increasing focus on premium streaming services.

The company also admitted it overestimated its growth saying,  "acquisition growth was lower than we projected." In response to these figures Netflix, Inc. (NASDAQ: NFLX) has revised their numbers for the coming quarter and made some much more conservative estimates looking forward. In addition, the company has been increasing the amount of content it produces internationally and domestically, some worry that this may lead to a reduction in quality and loss of subscribers.

Others still have expressed concern about the way the company accrues debt to fund its operations. The company stated, "We continue to see debt as the most optimal choice, the most cost-effective source of capital for the company. Obviously, we'd love to get to that point where we're organically and self-funding content, and we do see a point where we can get there. But until we do, we see as debt as the right choice in terms of cost of capital."

Don't Count Them Out, Yet

If you have been following Netflix, Inc. (NASDAQ:NFLX) for some time this may all seem very familiar. This isn't the first time a second-quarter slump has been felt by the company and some investors have taken notice of the pattern. Similar concerns were all voiced before, such as Q2 2016, and Netflix, Inc. (NASDAQ:NFLX) ended up blowing past all expectations in the following time. This feels very much like a retread of the past.

Concerns about free cash flow are legitimate but if we observe the same time period last year. Netflix, Inc. (NASDAQ:NFLX) is going through less than it did prior to noting improvement. With large focuses on marketing and new pushes in technological advancement like "smart downloads" I don't see Netflix, Inc. (NASDAQ:NFLX) falling too far. In fact, it has already begun to rally even as I type this. More short-term pain may be in order but I don't think it will bleed for too long, at this point the negative news may already be priced in. 

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