For the past decade one of the top tech companies in the world has been Netflix. While Netflix started as a company that shipped DVDs to people at a more affordable rate, they have continued to disrupt the entertainment industry. After putting traditional DVD rental businesses out of business, they now appear to having a big impact on the traditional home cable service providers. While they have had a negative impact on the traditional cable companies, they appear to be a big hit with investors as the stock for the company went up more than ten percent in value this week (http://variety.com/2017/digital/news/netflix-stock-all-time-high-cash-burn-strategy-1202498605/).
On Tuesday morning, investors in Netflix stock received some great news about the performance of the company. Netflix announced that they had added more than 5.3 million new users in the past quarter of 2017, which was almost twice what the market was expecting. This was just the latest example of growth in the company that has not been matched by any other providers in the country.
Overall, the company reported $2.79 billion in revenue in the quarter, which was just a little bit higher than the estimates. What was surprising to many people was that the company actually reported a smaller net profit of just 15 cents per share compared to Wall Street estimates of 16 cents per share.
While Netflix is clearly a leader in content providing and will continue to have an impact on the entertainment industry, the company does still have to deal with concerns over cash burn. The company has focused a lot on buying content over the past few years. While this has attracted a lot of customers to the service, it has led to a big cash drain. Cash flow was negative $920 million in 2015 and negative $1.7 billion in 2016.