Netflix shares opened up 9 percent Tuesday morning to a new all-time high.
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Millions of new subscribers continue to stream in to Netflix thanks to its ambitious lineup of original shows.
This proved above figures projected by both analysts and Netflix for the second quarter, which has traditionally proved a more slower period for the company.
For the first time ever, Netflix is expecting to make a profit on its global subscribers, according to RBC. In its letter to investors Netflix wrote, "We understand that our approach to films - debuting movies on Netflix first - is counter to Hollywood's century-old windowing tradition". Only a handful of countries including North Korea, China and Syria do not have the service.
"We're just seeing that the rewards of doing great content focusing on the quality of the service are paying off", said Reed Hastings, co-founder and CEO of Netflix, in the company's earnings interview.
For the first time Neflix had more foreign subscriptions than in the United States, with worldwide members accounting for more than half of the total. "Certainly, we, other companies (and) the public have weighed in heavily", Hastings said. The company is also adding shows in various languages.
The rate at which the subscriptions are happening for the company has a lot of chances to achieve its said target. "As long as this continues to drive strong subscriber growth, we believe the stock can generally keep working despite a premium valuation", said analyst Michael Graham. Expect to see an extended rally in NFLX stock over the coming days. "With five of the 14 total nominated best series contenders (Stranger Things, The Crown, House of Cards, Master of None and Unbreakable Kimmy Schmidt), Netflix had the most nominated series of any network".
Such a large base of subscribers gives Netflix leverage.
Under ASC 920, the following three criteria must be met in order for the content Netflix licenses to qualify for asset recognition: (i) the cost of each title is known or reasonably determinable; (ii) the title (source file) has been received; and (iii) the title's available for first showing, according to the presentation.
"We're such a small player in our viewing compared to linear TV, compared to YouTube", he pointed out in the company's earnings presentation.
However, it predicted there would be room for many internet TV services as viewers increasingly switch off from traditional TV.
During the quarter, the company recorded 1.07 million net additional subscribers in the U.S. and 4.14 million internationally.