Netflix stock price jumps after hours on 7 million new subscribers

The video streaming pioneer shocked Wall Street last quarter by falling short of new subscriber estimates, but Tuesday's figures put its total customer base at 137 million worldwide, two million more than consensus forecasts. Further, it issued aggressive guidance for Q4 2018, saying it expected an additional 9.4 million subscribers.

Netflix had expected to add about five million members in the quarter. Its global business added almost 5.9 million subscribers, compared with the average analyst estimate of 4.5 million.

Netlix shares surged more than 11 percent after the online TV service reported crowd-pleasing quarterly results after the market closed on Tuesday. During that quarter, Netflix had a dearth of new programming that resonated with viewers the way hits like House of Cards and Stranger Things had done in the past.

Analysts estimate that it added about 676 hours of original programming in the U.S. in the most recent quarter, 135% more than in the same period a year earlier.

"It was a surprisingly good quarter that caught a lot of the financial community off guard", said Jim Nail, a senior analyst at Forrester Research Inc. Netflix expects to add 28.9 million customers this year, setting a new record for the 21-year-old company.

Chief Executive Reed Hastings, who has pegged Netflix's content spending at $8 billion this year alone, told investors his firm is in for a battle.

Netflix never identifies which shows are most successful.

Analysts from USA financial group Keybanc downgraded their rating on Netflix to "sector weight" from "overweight", questioning whether the company was capable of improving investment returns and margins in years to come. "That's a really good number for a market that's this mature". Analysts were looking for $0.68 a share.

Profit in the quarter more than tripled from a year ago to $403m while revenues grew 34% to $4 billion. He also said the company would begin reporting only paid memberships - a number that he said Netflix has been able to forecast more accurately - starting in January. While most of that still funds shows licensed from other companies, original programs account for a growing share.

While WarnerMedia CEO John Stankey stated while announcing the new venture, "our job is to build a compelling offer of content....[my job] isn't to build another Netflix", it wouldn't be surprising if landing a blow against the streaming Goliath was in the back of his mind.

Hastings, 58, suggested that he wasn't anxious about the competition. "We're just going to focus on that for a very long time". "The game is on".