Netflix will be releasing its earnings report after the close of trading on Wednesday, and investors are eagerly awaiting the results.
The streaming giant’s shares have experienced a significant rally, surging 36% since its last earnings report, and over 50% for the year to date. As the announcement approaches, estimates for the company’s performance have been steadily increasing.
Positive Factors Boosting Netflix Shares
Analysts believe that there are three key factors contributing to the positive outlook for Netflix (ticker: NFLX) shares leading up to the earnings call.
1. Early Favorable Data from Advertising-Supported Subscription Tier
Industry experts expect that there will be encouraging early data regarding the rollout of Netflix’s advertising-supported subscription tier. This development is anticipated to have a positive impact on the company’s stock.
2. Crackdown on Password Sharing to Drive Subscription Growth
There is optimism surrounding Netflix’s efforts to crack down on password sharing, with expectations of better-than-forecast subscription growth as a result. This proactive measure is poised to benefit the company’s bottom line.
3. Netflix’s Resilience Amid Hollywood Strikes
In light of the ongoing strikes in Hollywood by both writers and actors, there is a growing consensus that Netflix is in a stronger position than its competitors to weather the storm. This resilience further bolsters investor confidence.
June Quarter Forecast
Netflix has projected revenue of $8.24 billion for the June quarter, reflecting a 3.4% increase from the same period last year. The company expects to achieve a profit of $2.84 per share, compared to $3.20 per share in the previous year.
Overall, the upcoming earnings report has generated high expectations, fueled by positive market indicators and Netflix’s strategic initiatives. Investors are eagerly awaiting the release of these crucial results.
Netflix Expecting Comparable Growth in Second Quarter
Netflix’s Confidence Amidst Potential Hollywood Strike
During the first-quarter call, Netflix co-CEO Ted Sarandos expressed confidence in the company’s ability to serve its members amidst potential challenges. Sarandos highlighted the extensive lineup of upcoming shows and films from around the world, asserting that Netflix is well-prepared to meet its members’ expectations. Despite the looming threat of a Hollywood writers strike, Sarandos affirmed that the company remains committed to investing around $17 billion in content for both this year and next year.
Netflix’s Advantage in Non-English Content Creation
While a prolonged strike would not be favorable for viewers or content providers, it would underscore Netflix’s advantage in creating non-English content. In markets where U.S. unions have no influence, Netflix’s ability to produce local content could play a crucial role. Additionally, a strike may temporarily reduce content spending, thus leading to improved profit margins for the streaming giant.
Netflix Post-Earnings Conference Call
Netflix is scheduled to hold a post-earnings conference call on Wednesday at 3 p.m. Pacific time. During the call, questions will be addressed by BofA Securities analyst Jessica Reif Ehrlich.