The world's largest video streaming company -
- continues to be the darling of investors thanks to its robust
earnings announcement for the fourth quarter and an optimistic
outlook. NFLX was a high-flying stock in 2013 and was the top
performer in the S&P 500 and Nasdaq 100, surging nearly 300% on
the year, and there is plenty of hope that this trend can continue
in 2014 as well (read:
The Incredible Run for NFLX Puts These ETFs in
Netflix Earnings in Detail
The company surpassed our estimates on both earnings and revenues
on an expanding subscriber base. Earnings at NFLX jumped six fold
to 79 cents per share in Q4, comfortably beating the Zacks
Consensus Estimate of 65 cents. Revenues climbed 24% to $1.18
billion and outpaced our estimate of $1.166 billion.
Netflix added 2.33 million domestic and 1.74 million international
subscribers, thus having a total customer base of 44.35 million.
The number was well above management expectations of 2 million and
1.3 million for domestic and international subscribers,
Subscriber gains at home were credited to continued growth in
Internet video, strong sales of Internet-connected devices, service
improvements and effective marketing (read:
Top Ranked Internet ETF in Focus: FDN
The company provided an upbeat guidance for the first quarter of
2014. It expects earnings per share to come in at 78 cents, which
is in-line with the Zacks Consensus Estimate. Additionally,
subscriber growth continues to gain momentum with the expected
addition of 2.25 million in the U.S. and 1.6 million
internationally. This would bring the total subscriber base to more
than 48 million in the first quarter.
Amid stiff competitive pressures, Netflix has maintained its lead
in online video streaming as it continues to expand its original
content offerings and plans to launch more television shows and
This includes a new season of Lilyhammer, House of Cards, Orange Is
the New Black and Hemlock Grove; final season of The Killing; a new
slate of cartoons from DreamWorks Animation; a Marco Polo series
from the Weinstein Co and many others. These will be accretive to
subscriber growth going forward.
Further, Netflix is seeking to expand in international markets, in
particular Europe. The company is also exploring new pricing
strategies that would likely drive revenues and profits higher
3 Top Ranked Europe ETFs to Buy Now
Moreover, Netflix currently has a Zacks Rank #2 (Buy) and a solid
Zacks Industry Rank
in the top 35% which adds to the bullish outlook and suggests good
Driven by huge earnings beat, robust subscriber gains and a bullish
outlook, NFLX shares soared about 18% in after-hours trading on
Wednesday. This has spread more optimism into the stock's future.
ETFs to Consider
As such, investors might want to capitalize of the NFLX growth and
the upcoming surge in its share price with lesser risk in the form
of ETFs. For these investors, we have highlighted two ETFs that
have high allocations to Netflix and could be big movers in the
coming days. These have a top Zacks ETF Rank of 1 or 'Strong Buy'
and may see more gains in the months ahead (read:
3 ETFs to Watch for Big Moves This Year
PowerShares Nasdaq Internet Portfolio (
This fund follows the Nasdaq Internet Index, giving investors
exposure to the broad Internet industry. The fund holds about 80
stocks in its basket with AUM of $324 million while charging 60 bps
in fees per year. It trades in moderate volume of nearly 63,000
shares a day.
Netflix takes the eight spot with 3.40% of assets. In terms of
industry exposure, Internet mobile application makes up for more
than two-third share in the basket, followed by Internet retail and
software & programing. PNQI has added over 1% so far this year.
First Trust Dow Jones Internet Index (
This is one of the popular and liquid ETFs in the broad tech space
with AUM of over $2 billion and average daily volume of more than
300,000 shares. The fund tracks the Dow Jones Internet Composite
Index and charges 57 bps in fees per year (see:
all the Technology ETFs here
Netflix occupies the tenth position in the basket with 3.06% share.
From a sector look, Internet mobile applications account for more
than half the portfolio while Internet retail and software &
programing receive double-digit exposure. The ETF is up nearly 2.4%
These two products are clearly outpacing the broad market funds and
are expected to continue seeing this trend in the coming months
given the astounding comeback by Netflix and the booming Internet
space. And with top Zacks ETF Ranks, the sector is clearly poised
for more gains this year as well.
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FT-DJ INTRNT IX (FDN): ETF Research Reports
NETFLIX INC (NFLX): Free Stock Analysis Report
PWRSH-ND INTRNT (PNQI): ETF Research Reports
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