Netflix (NASDAQ: $NFLX) is a global subscription-based streaming service with a huge catalogue of TV shows, movies, anime, documentaries and more via internet-connected devices. The California-based company has solidified its position as the world’s leading streaming platform and is set to report its highly anticipated first-quarter earnings on Thursday, April 18, 2024.
Subscriber Growth in Focus
The company reported a subscriber base of 260.8 million as of the end of 2023 – a 12% increase from the previous year. Following a mixed bag of results from the US banking sector, all eyes will be on Netflix as it becomes the first major US tech company to report its Q1 performance. The company’s subscriber growth remains a pivotal metric, providing insights into its trajectory. In Q4 2023, Netflix added a record 13.1 million new subscribers, buoyed by the launch of its ad-tier plan in late 2022 and a crackdown on password-sharing.
Analyst Expectations on Netflix
Wall Street analysts’ expectations are bullish on Netflix’s Q1 performance, with several firms raising their price targets ahead of the earnings report. Morgan Stanley’s Ben Swinburne estimates that Netflix reeled in 7.5 million new paid customers in the first quarter, driven by the success of live-action series like “Avatar: The Last Airbender,” “Fool Me Once,” and “The Gentlemen.” TD Cowen’s John Blackledge has increased his Q1 2024 net adds estimate to 5.11 million, reflecting the company’s continued momentum in paid sharing initiatives.
Macquarie’s Tim Nollen also raised his target price on Netflix stock from $595 to $685, maintaining an “outperform” rating. Nollen noted that Netflix’s recent moves in cracking down on password sharing and introducing the lower-cost, ad-supported tier have “successfully reaccelerated its sub and [average revenue per member] growth.” The analyst believes Netflix remains the “undisputed leader in streaming TV” and has pricing power relative to its competitors.
Wedbush Securities is even more bullish, modeling Netflix net adds of 8.5 million for Q1, with the inclusion of 2 million in the US and Canada. Analyst Alicia Reese expects “further catalysts ahead,” such as the “full digestion of the advertising potential” of the WWE deal starting in 2025, as well as gaming expansion into more licensed IP.
On average, analysts expect Netflix to post Q1 revenue of $9.27 billion and earnings per share of $4.52, slightly higher than the company’s previous guidance of $9.24 billion in revenue and an EPS of $4.49.
Expansion into Live Sports Programming
Netflix’s recent deal with TKO Group Holdings to exclusively broadcast WWE’s flagship program “Raw” starting in 2025 marks a significant expansion into live-streaming entertainment. The 10-year agreement will grant Netflix exclusive rights to air “Raw” in the US, Canada, UK, and Latin America, a groundbreaking move for the streaming giant.
Investors eagerly await the upcoming earnings report, hoping to glean insights into the potential growth and impact of this new live sports venture, which could reshape Netflix’s content strategy and solidify its position as a dominant player in the evolving streaming landscape.
Netflix Stock Performance
NFLX stock has been a standout performer in 2024, with a year-to-date gain of 28% . This outperformance has been driven by the company’s resurgent subscriber growth and broader market sentiment that remains upbeat on the technology sector. At the time of writing, NFLX shares are trading at $609.12, a slight decline of 0.74% hours before the earnings release.
However, the stock has encountered some headwinds in recent weeks, with the technology sector losing steam amid a surge in US bond yields following inflation data for March that was hotter than expected. Historically, investors have tended to penalize positive earnings results in times of souring market sentiment, adding uncertainties to the outlook for big tech earnings.
Nonetheless, Netflix’s strong Q1 performance and optimistic forecasts could potentially propel the company’s share price even higher. On the other hand, if the earnings report falls short of expectations, it could disrupt the upward trajectory of its stocks.
Is Netflix a Buy?
While Netflix’s subscriber growth and financial performance have been impressive, there are some cautionary notes to consider. Michael Nathanson of MoffettNathanson, for instance, remains “cautious of pie-in-the-sky forecasts that see this hockey stick continuing indefinitely,” warning that the password-sharing crackdown was likely a “pull-forward of growth” and does not change the underlying fact that there are fewer and fewer households in the US and Canada yet to subscribe to the streamer.
Also, the company’s expansion into live sports programming, while a significant milestone, comes with its own set of challenges. Successful execution and the ability to attract and retain viewers will be crucial in determining the long-term impact of the WWE partnership.
But again, Netflix’s position as the leader in streaming and its ability to leverage its competitive advantages, such as non-English language content, depth of viewing and exclusive original programming, suggest that the company is well-positioned to navigate the evolving streaming landscape. As investors eagerly await the Q1 earnings report, the market will be closely watching for signs of continued growth and Netflix’s ability to maintain its dominance in the industry.
Click Here for Updates on Netflix – It’s 100% FREE to Sign Up for Text Message Notifications!
Disclaimer: This website provides information about cryptocurrency and stock market investments. This website does not provide investment advice and should not be used as a replacement for investment advice from a qualified professional. This website is for educational and informational purposes only. The owner of this website is not a registered investment advisor and does not offer investment advice. You, the reader / viewer, bear responsibility for your own investment decisions and should seek the advice of a qualified securities professional before making any investment.
