Netflix Inc. (NASDAQ: NFLX) is out with its third-quarter earnings report. The streaming movie and content giant has reported earnings of $0.96 per share on revenues of $1.41 billion. Thomson Reuters was calling for $0.93 per share and $1.41 billion in revenue. Its net subscriber additions were 3.02 million, and the total streaming members were 53.06 million.

Several things were issued that investors need to consider on top of what is deemed as a disappointing subscriber add rate. The first is that this stock was just brutalized after its report. Netflix did address a standalone service offering from HBO, saying that this is only natural and inevitable. The companies will have different shows.

Other key data was included:

• Netflix ended the third quarter with 37.22 million members and is forecasting another 4 million members added in the fourth quarter to have over 57 million global members.
• Domestic streaming revenue was $877 million in the third quarter.
• The DVD-By-Mail service in the United States was about 6 million members, which added about $89 million in profit contribution in the third quarter.
• Netflix sees fourth quarter U.S. margin contribution rising almost 500 basis points on a year over year basis.
• Netflix added 2 million members internationally, to end with some 15.84 million members — with
  lower net adds than its forecast, but higher than prior year.
• Starting in January, it will have to pay higher VAT in most of Europe due to changes in European law. Netflix will absorb these increases rather than pass them on to its members.

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As far as U.S. margin contribution, Netflix said:

Our US contribution margin grew about 500 bps to 28.6% for Q3. After achieving 30% contribution margin, likely in Q1 or Q2 of next year, we will seek to grow margins an average of 200 basis points per year for the following years. Ideally, we will achieve 40% contribution margin five years after achieving 30%. This increase in our domestic contribution margin gives us room to increase content spending as we grow, as well as substantial domestic profitability.

Prior to the impact of the earnings report, the Thomson Reuters consensus price target from analysts was roughly $473.75.

Netflix shares were down only $0.53 at the close of trading on Wednesday at $448.59, although this was a volatile day for the market and for Netflix. The DJIA was down over 400 points at one point, while Netflix had a trading range of almost $21, even without considering the after-hours drop. At almost 30 minutes after the close, Netflix shares were down a whopping 26% around $330, on more than 2 million shares traded in the after-hours alone.

Netflix has traded in a 52-week range of $299.50 to $489.29.

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