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Netflix (NFLX) Stock Plunges After Subscriber Whiff

By U.S. News & World Report

Shares of Netflix (ticker: NFLX), one of the most heavily followed growth stocks on Wall Street, fell more than 15 percent in after-hours trading on Monday after the streaming media company reported that it missed revenue projections and projected growth numbers for its subscriber base for the second quarter.

Netflix posted earnings per share of 5 cents on revenue of $1.97 billion. Analysts expected the video-streaming service to post second-quarter earnings of 2 cents per share, down 66 percent from the 6 cents per share it earned in the year-ago period. Analysts expected revenue to rise 28.4 percent to $2.11 billion.

“We are more concerned, and also understand, that the Q3’s guidance on subscribers, 2.3 million, which is much lower than the street’s estimates of 774,000 U.S. and 2.85 million international subscribers,” says K C Ma, professor of finance at Stetson University. “It appears that NFLX has hit a wall of higher pricing and underestimate the price elasticity of their users.”

[Read: How to Invest in Streaming Media.]

When Netflix issued its own internal forecasts alongside its first-quarter results, it projected second quarter net subscriber additions of 2.5 million — 500,000 coming domestically and the other 2 million from overseas. At the time, even those projections disappointed and shares instantly plunged more than 10 percent on the news. Monday, it was severe disappointment again as Netflix failed to match even those low expectations, posting net additions of just 1.68 million members — 160,000 from the U.S. and 1.52 million from abroad.

This is a pivotal year for Netflix and NFLX stock as it tries to execute on its ambitious global expansion plans. In January alone, Netflix moved into 130 new countries, and international growth is widely seen by investors as the key to sustained growth as the U.S. market saturates.

Part of the concern going into Netflix’s second-quarter surrounded the extent to which a price hike, which would go into effect for millions of customers in May and June, would affect subscriber growth. The hike takes the rate of the standard HD plan to $9.99 per month from either $7.99 per month or $8.99 per month, depending on when users joined.

[See: 7 Global Goats That Could Bring Market Mayhem.]

For NFLX stock, keeping up with the high expectations of the market is a necessity. Netflix was the top-performing name in the entire Standard & Poor’s 500 index in 2015, with shares soaring 135 percent. But a sky-high valuation has been tough for the stock to live up to, as shares had fallen 13 percent for the year even before Monday’s after-hours collapse.

Even after that stumble, the price-earnings ratio for NFLX stock going into earnings today was 341 — well above the ratio of the S&P, which currently hovers near 25.

Amazon.com (AMZN), among other competitors like Hulu and HBOGo, is trying to battle Netflix for subscribers as ” cord-cutting” goes mainstream. But Netflix is taking steps of its own to improve its service and tailor its offerings to its userbase.

[Read: 5 Stocks to Watch This Week: NFLX YHOO JNJ INTC GM.]

For instance, the streaming video leader recently launched a feature called “Flixtapes” that lets users create a mixtape-like assemblage of their favorite programming, ideally around a certain theme. Netflix hopes that the feature will allow the service to better predict the types of content its users will like given a certain taste profile.

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Netflix (NFLX) Stock Plunges After Subscriber Whiff originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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