Netflix Earnings: 3 ETFs React to First-Quarter Beat

Shares of Netflix were down as much as 11 percent after the online streaming company only added 2.7 million subscribers, which was almost half of the 5 million that Wall Street analysts were expecting.

During its first-quarter earnings report, Netflix did address the entrance of new competitors to the streaming space with Apple and Disney joining the fray. Lighter guidance for the second quarter may have put some investors on pause, but some analysts quelled any fears of future revenue growth decreasing.

“Early 3Q trends are strong, led by Stranger Things S3, & we believe churn rates have receded closer to pre-price increase levels,” J.P. Morgan analyst Doug Anmuth said.

“Conversely, in 2H′19, there should be a positive impact from an improving slate and we are, therefore, optimistic about the company’s opportunity to grow subscriber additions y/y in a FY basis,” said Piper Jaffray’s Michael Olson.

“Some will say this miss suggests maturation or lack of pricing power; we see neither. We would note Netflix misses have been followed by strong qtrs, and, along those lines, we expect Netflix’s very strong 2H slate will lead to a rebound in sub growth,” Credit Suisse analysts said.

Nonetheless, here are three exchange-traded funds (ETFs) to watch with the biggest Netflix holdings:

  1. AdvisorShares New Tech and Media ETF (NYSEArca: FNG): seeks long-term capital appreciation. The fund is an actively managed ETF that seeks to achieve its investment objective by investing, under normal circumstances, at least 80% of its net assets in securities of technology and media companies. It will invest primarily in U.S. exchange-listed equity securities, including common and preferred stock and ADRs, of technology and technology-related companies, including innovative and fast-growing technologies. The fund will concentrate its investments in the software and services industry within the information technology sector.
  2. Invesco NASDAQ Internet ETF (NASDAQ: PNQI): The investment seeks to track the investment results (before fees and expenses) of the NASDAQ Internet IndexSM. The fund generally will invest at least 90% of its total assets in securities that comprise the underlying index. The underlying index is designed to track the performance of the largest and most liquid U.S.-listed companies engaged in Internet-related businesses that are listed on one of the three major U.S. stock exchanges.
  3. First Trust Dow Jones Internet Index (NYSEArca: FDN): seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an equity index called the Dow Jones Internet Composite Index (SM) (the “index”). The fund will normally invest at least 90% of its net assets (including investment borrowings) in the common stocks that comprise the index. The index is designed to measure the performance of the largest and most actively traded securities issued by U.S. companies in the Internet industry. The index is a composite of its two sub-indices, the Dow Jones Internet Commerce Index and the Dow Jones Internet Services Index.

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