Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Tuna Amobi Explains Why Netflix, Inc. (NFLX)’s Huge EPS Miss Didn’t Faze Wall Street

Why has Wall Street seemingly vindicated Netflix, Inc. (NASDAQ:NFLX)’s strategy in the last quarter even though it led to a massive miss on earnings per share?

According to Tuna Amobi of S&P Capital IQ Analysts in an interview with Bloomberg Surveillance, Wall Street is not looking at the earnings per share miss but rather at other factors that point to a far more prosperous future for the company.

Bloomberg’s Olivia Sterns points out to Amobi that the consensus before Netflix, Inc. (NASDAQ:NFLX) reported its performance for its latest fiscal quarter was that the company would post earnings of $0.63 per share. During its report, the company revealed $0.38 earnings per share, Sterns adds, yet early trading on Thursday saw the stock up 10%.

“The main miss, Olivia, was due to foreign exchange headwinds. If you strip those out, I think you could get the sense that the company actually significantly outperformed. [And] it was no surprise that foreign exchange was a factor because they are accelerating their international expansion. But the real story, I think, is subscriber growth,” Amobi tells Sterns.

According to the analyst, Netflix, Inc. (NASDAQ:NFLX) outperformed domestic subscriber growth estimates by over 500,000. It also beat expectations internationally, adds Amobi.

During its report, the company said it added 2.3 million subscribers in the U.S. and 2.6 million outside of the U.S. to end the quarter with over 62 million subscribers.

There seems to be an “inflection in the business model” that shows no signs of slowing down soon, Amobi tells Sterns. He adds that S&P Capital IQ thinks the company can actually get to the 90 million homes it says is its potential addressable market in the U.S. Furthermore, the huge upside in the stock can be seen in its international expansion, Amobi says, as they will roll out their service to 200 countries in the next two years versus the 50 countries they are in at the moment.

Netflix, is NFLX a good stock to buy, NASDAQ:NFLX, Tuna Amobi, earnings per share miss, Wall Street

Sterns counters, however, saying that international expansion costs the company big capital outlays. In the last quarter, the company reported $65 million spent on international expansion and that figure is expected to balloon to $100 million next quarter, she says.

Amobi says that the way Wall Street sees this is that as long as Netflix, Inc. (NASDAQ:NFLX) delivers subscribers with their expansion, they are not in the red. So while the company does not make money now in its international operation, it has set itself up for “significant material profits” starting in 2017 and beyond.

Daniel Benton’s Andor Capital Management owned 1.25 million Tesla Motors Inc (NASDAQ:TSLA) shares by the end of 2014.

I just made 84% in 4 daysI Just Made 84% in 4 Days By Blindly Following This Hedge Fund

I just made 84% in 4 days by blindly imitating a hedge fund’s stock pick. I will tell you how I pulled such a huge return in such a short time but let me first explain in this FREE REPORT why following hedge funds’ stock picks is one of the smartest things you can do as an investor. We launched our quarterly newsletter 2.5 years ago and not one subscriber has, since, said ‘I lost money by EXACTLY following your stock picks’. The reason is simple. You can beat index funds by creating a DREAM TEAM of hedge fund managers and investing in only their best ideas. I just made 84% in 4 days by blindly imitating one of these best ideas. CLICK HERE NOW for all the details.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.