Here's why Netflix shares rose about 20% in after-hours trading

Netflix shares rose as much as 20% in after-hours trading (AHT) on Monday as the Internet television network reported better-than-expected increase in earnings and subscribers. In the third quarter ended September 2016, Netflix added 3.6 million subscribers worldwide.

It said that the rise was better than the two million it had earlier forecast, which helped it take its total number of subscribers to 86.7 million. This shows a 4.33% increase from the previous quarter.

In terms of a geographical breakup, the California-based company said it had added 400,000 members in the US against its forecast of 300,000. The remaining 3.2 million members were added across the world.

With regards to earnings, Netflix said its total revenues for the quarter increased 36% year-on-year to $2.16bn (£1.77bn). The company noted that this was the first time its quarterly revenues crossed the $2bn mark. Netflix attributed its stellar performance to strong content such as its original series Stranger Things and Narcos.

It earned an operating income of $106m in the quarter, which is more than its $64m estimated. It also reported a net income of $52m for the period, which was more than double its earlier forecast of $22m.

In terms of operational highlights, the company said it had localised its services in Poland and Turkey, where it had also started accepting payment in local currency. The company further claimed to have added a local language user interface, subtitles, dubbing and local content in these regions.

With regards to content, the company in a letter to shareholders said, "We are now in the fourth year of our original content strategy and are pleased with our progress. In 2017, we intend to release over 1,000 hours of premium original programming, up from over 600 hours this year. The Internet allows us to reach audiences all over the world and, with a growing base of over 86 million members, there's a large appetite for entertainment and a diversity of tastes to satisfy."