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Netflix, Inc. (NFLX) Stock Is All Good Except for the Valuation

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Netflix, Inc. (NASDAQ: NFLX ) reported second-quarter earnings on Monday afternoon. In many ways, the numbers look great, but the Netflix stock report wasn't without a few bumps.

via Netflix


Overall, the business is doing quite well, but the costs of operations are ridiculous and the valuation of Netflix stock is even more so.

Subscribers and Costs Grow

More than 4 million new domestic subscribers were added year-over-year and 1 million over the quarter. Contribution profit for the segment leapt from $414 million to $560 million, which was about a 35% increase. The profit per paid subscriber also rose about 23%, from $9.01 to $11.13.

However, the marketing cost per new paid subscriber was up by more than 55%, from $17.55 to $26.30. Thus, Netflix is spending more money per new subscriber to get them onto the service, and that's not a good thing. Still, the domestic business is arguably healthy, with over $1.16 billion in contribution profit.

International subscribers have really caught on, apparently. I confess surprise that there are now 48.7 million paid memberships, up from 33.9 million last year. I just didn't think other cultures had the same viewing habits as Americans.

Mind you, Netflix stock has to deal with the fact that international operations have only been...