Netflix Signs Major Deal with CBS Studios
Netflix Signs Contract with CBS Studios International
Stock Tumbles on Disappointing Subscriber Growth
Reason to Panic or Buying Opportunity?

Los Angeles, CA, July 19, 2016 – Yesterday, the online streaming giant Netflix (NFLX) has signed a contract with CBS Studios International for the new Star Trek series in 188 nations outside the U.S. and Canada. Netflix will be the exclusive Streaming Agent and the next set of shows will debut in January 2017. This is one more milestone agreement on the path to rapid expansion abroad.

Unfortunately, NFLX's Q2 earnings report was not good news and its stock tumbled 15.16% to $83.83 in after-hours trading, after the Internet streaming service posted disappointing subscriber growth and gave a subdued forecast for the third quarter 2016. Netflix added 1.7 million members during Q2 2016, below its own expectations of 2.5 million. 160,000 of those memberships were added domestically in the U.S. and 1.52 million were added abroad.  While analysts expected 2 cents earnings per share, the company exceeded expectations by reporting 9 cents a share. Revenue for the second quarter was $1.97 billion, below analysts' forecasts of $2.11 billion.

"We are growing, but not as fast as we would like or have been. Disrupting a big market can be bumpy, but the opportunity ahead is as big as ever and we continue to improve every aspect of our business," CEO Reed Hastings said in a shareholder letter.

While these may be disappointing Q2 results, Netflix still looks like an excellent investment opportunity to us, especially now. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and especially the increase in net income. Growth abroad and expansion domestically are expected to accelerate revenues again by the 4th quarter of 2016. We believe that Netflix has established itself solidly in a still rapidly growing market with little serious competition.

Netflix Expanding Worldwide
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