Netflix (NASDAQ:NFLX) Shares Gap Down Following Weak Earnings

Key Points

• Netflix shares gapped down almost $100 to open at $1,142.90 following a disappointing earnings report that showed an EPS of $5.87, missing estimates by $1.01.
• The company reported quarterly revenue of $11.51 billion, a 17.2% increase from the same quarter last year, but slightly below the expected $11.52 billion.
• Despite the earnings miss, several brokerages have increased their price targets for Netflix, with analysts maintaining a Moderate Buy rating on the stock overall.

Netflix, Inc. (NASDAQ:NFLX - Get Free Report) shares gapped down prior to trading on Wednesday following a dissappointing earnings announcement. The stock had previously closed at $1,241.35, but opened at $1,142.90. Netflix shares last traded at $1,131.37, with a volume of 4,329,698 shares.

The Internet television network reported $5.87 EPS for the quarter, missing analysts' consensus estimates of $6.88 by ($1.01). Netflix had a return on equity of 42.50% and a net margin of 24.58%.The company had revenue of $11.51 billion for the quarter, compared to analyst estimates of $11.52 billion. During the same period in the prior year, the firm posted $5.40 earnings per share. The business's quarterly revenue was up 17.2% compared to the same quarter last year. Netflix has set its FY 2025 guidance at EPS. Q4 2025 guidance at 5.450-5.450 EPS.

Wall Street Analysts Forecast Growth

A number of brokerages have recently commented on NFLX. KeyCorp boosted their price objective on Netflix from $1,070.00 to $1,390.00 and gave the stock an "overweight" rating in a research report on Thursday, July 10th. Robert W. Baird upped their price target on Netflix from $1,300.00 to $1,500.00 and gave the company an "outperform" rating in a report on Monday, July 21st. BMO Capital Markets reaffirmed an "outperform" rating and issued a $1,425.00 price target (up from $1,200.00) on shares of Netflix in a report on Tuesday, July 15th. Sanford C. Bernstein reaffirmed a "buy" rating on shares of Netflix in a report on Friday, October 17th. Finally, Cowen reaffirmed a "buy" rating on shares of Netflix in a report on Tuesday, October 7th. Two analysts have rated the stock with a Strong Buy rating, twenty-seven have given a Buy rating, eight have given a Hold rating and two have given a Sell rating to the company. Based on data from MarketBeat, the stock presently has an average rating of "Moderate Buy" and an average target price of $1,344.34.

Insiders Place Their Bets

In other news, CEO Theodore A. Sarandos sold 2,026 shares of the stock in a transaction that occurred on Tuesday, August 5th. The stock was sold at an average price of $1,160.62, for a total value of $2,351,416.12. Following the completion of the sale, the chief executive officer directly owned 15,168 shares of the company's stock, valued at approximately $17,604,284.16. This represents a 11.78% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, CEO Gregory K. Peters sold 2,026 shares of the stock in a transaction that occurred on Tuesday, August 5th. The shares were sold at an average price of $1,157.44, for a total value of $2,344,973.44. Following the completion of the sale, the chief executive officer directly owned 12,781 shares of the company's stock, valued at $14,793,240.64. The trade was a 13.68% decrease in their ownership of the stock. The disclosure for this sale can be found here. In the last three months, insiders sold 104,100 shares of company stock valued at $122,710,980. 1.37% of the stock is owned by insiders.

Institutional Investors Weigh In On Netflix

Several large investors have recently modified their holdings of NFLX. Norges Bank purchased a new stake in shares of Netflix during the second quarter worth approximately $7,929,645,000. Laurel Wealth Advisors LLC raised its stake in shares of Netflix by 128,553.9% during the second quarter. Laurel Wealth Advisors LLC now owns 4,881,129 shares of the Internet television network's stock worth $6,536,466,000 after purchasing an additional 4,877,335 shares during the last quarter. Nuveen LLC purchased a new stake in shares of Netflix during the first quarter worth approximately $2,385,585,000. Kingstone Capital Partners Texas LLC raised its stake in shares of Netflix by 343,058.2% during the second quarter. Kingstone Capital Partners Texas LLC now owns 2,463,876 shares of the Internet television network's stock worth $3,299,450,000 after purchasing an additional 2,463,158 shares during the last quarter. Finally, Goldman Sachs Group Inc. raised its stake in shares of Netflix by 57.3% during the first quarter. Goldman Sachs Group Inc. now owns 3,393,064 shares of the Internet television network's stock worth $3,164,134,000 after purchasing an additional 1,236,251 shares during the last quarter. 80.93% of the stock is owned by institutional investors and hedge funds.

Netflix Price Performance

The company has a debt-to-equity ratio of 0.58, a current ratio of 1.34 and a quick ratio of 1.34. The company has a 50 day moving average price of $1,214.20 and a 200 day moving average price of $1,182.49. The firm has a market cap of $475.07 billion, a PE ratio of 47.68, a PEG ratio of 2.08 and a beta of 1.59.

Netflix Company Profile

Netflix, Inc provides entertainment services. It offers TV series, documentaries, feature films, and games across various genres and languages. The company also provides members the ability to receive streaming content through a host of internet-connected devices, including TVs, digital video players, TV set-top boxes, and mobile devices.

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