Internet exchange traded funds popped Tuesday on better-than-expected third quarter results from Netflix (NasdaqGS: NFLX) that surpassed speculation of a slowdown in net subscriber growth.
NFLX surged 19.4% Tuesday as international subscriber growth outpaced guidance and the company revealed a strong outlook, reports Anita Balakrishnan for CNBC.
The internet streaming provider posted third-quarter earnings per share of 12 cents, compared to 7 cents per share for the same period last year, on revenue of $2.29 billion, capitalizing on original series like “Stranger Things” and Narcos.” Analysts expected third quarter earnings of 6 cents per share on revenue of $2.28 billion.
“We are now in the fourth year of our original content strategy and are pleased with our progress,” the company said in a letter to shareholders. “In 2017, we intend to release over 1,000 hours of premium original programming, up from over 600 hours this year.”
Netflix also announced a gain of 370,000 net memberships in the U.S. and 3.2 million internationally, beating its initial forecast of 2.3 million new users.
The unexpected strength in Netflix helped bolster internet-related ETFs. For instance, the PowerShares NASDAQ Internet Portfolio (NasdaqGS: PNQI) rose 2.2% and First Trust Dow Jones Internet Index Fund (NYSEArca: FDN) rose 2.1% on Tuesday.
SEE MORE: Technology ETFs Are Making a Strong Comeback
PNQI tracks the largest and most liquid U.S.-listed companies engaged in internet-related businesses and employs a modified market cap-weighted indexing methodology based on the market cap ranking of the underling idnex securities. The ETF includes a 4.0% tilt toward NFLX and hefty 59.9% weight in internet software & services sub-sector.
SEE MORE: Internet ETFs to Capitalize Off Growth in E-Commerce
FDN also follows companies that generate most of its revenue from internet businesses and includes some market cap and liquidity requirements for inclusion. The fund has a 4.6% tilt toward NFLX and a large 70.4% position in the information technology sector.
NFLX also makes up 5.2% of the actively managed ARK Web x.0 ETF (NYSEArca: ARKW), which tracks a number of companies that benefit from increase use of shared technology, infrastructure and services in cloud computing, big data, social media, internet, devices and gateways, e-commerce, media ecosystems, health care, sharing economy, point of sale, telecom and cryptocurrencies. ARKW was up 2.1% Tuesday.
For more information on the tech sector, visit our technology category.
PowerShares NASDAQ Internet Portfolio