Netflix's Silver Lining?

The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics relating to their 10-Bagger portfolio.

There was good and bad in Netflix's recent earnings report. Although the company reported a solid profit, the market rightly worried about membership growth. The company's numbers came in low, and are putting its goal of adding 7 million new members in 2012 in jeopardy. That's not a good sign, especially when you consider the battle for eyeballs and entertainment dollars. Between Google's YouTube,, Coinstar, and DISH Network, Netflix has to keep bringing in the subs. The company also announced it will add another international market, which will result in a loss for the fourth quarter. The number David found most significant was the change in contribution margin for domestic streaming. It jumped 2.4 percentage points. Even with low paid subscriber growth in domestic streaming, the incremental sub is really making an impact, helping fund its growth. That might prove very attractive over the long haul.

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David Meier has no positions in the stocks mentioned above. John Reeves owns shares of Google. The Motley Fool owns shares of, Google, and Netflix. Motley Fool newsletter services recommend, Google, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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