What's going on?

Netflix�s stock jumped about 8% to a new record high (tweet this) following the release of its financial results on Wednesday, which showed its subscriber growth beat expectations by a big margin.

What does this mean?

It was generally thought that Netflix had come close to fully penetrating the US market; however, it�s still managing to grow, adding almost 2 million new users in the most recent quarter. More importantly perhaps, it�s significantly ramping up international user growth � and doing so much more quickly than expected. It added about 5 million new international subscribers versus expectations of 3.7 million, which is a big beat. The popularity of original programs, like The Crown, helped drive growth.

Why should I care?

The bigger picture: Netflix shows the power of big data.

Netflix has a huge amount of data on people�s viewing habits because it knows exactly when you stop watching and, conversely, which shows you keep coming back to. Multiply those data points across its millions of users and it has a pretty good idea of what makes a good TV show. Add in billions of dollars in funding for new shows and you get a powerful potion of captivating original programming � which, in turn, drives more subscriber growth� and more data.


For the stock: Netflix is steadily getting more profitable.

The company expects 2017 to show significant �margin expansion,� which means it is expecting to make more profit for every dollar it gets paid by subscribers. This is partly because of the scalability of its content: one show can appeal to a huge number of viewers in many different countries. Balanced against this positive factor is a stock price that is already factoring in investors� high expectations. Netflix will probably have to improve its margins and continue its growth, lest it disappoint investors.