Netflix stock recently reached new highs as a result of the viral success of Squid Game. But will the streaming service generate significant profit and revenue? Here’s what we know so far:
- Netflix anticipates 3.5 million new subscribers (up from 1.5 million in the previous quarter).
- We anticipate $2.55 earnings per share on $7.48 billion in revenue.
- Netflix remains the dominant streaming service in the United States, outperforming YouTube, Disney+, and Amazon Prime.
- Netflix stock is at an all-time high.
Let us begin with the big picture. Netflix shares reached a new high in October, which is impressive given that most other tech stocks fell. Netflix experienced explosive growth during the pandemic and is still riding the wave as more people switch to streaming services.
In addition, Netflix recently debuted a new hit show called Squid Game. Netflix does not release exact figures, but it is likely the most-watched Netflix original ever. This show (a dystopian Korean survival game) could be enough to attract a large number of new subscribers.
Analysts anticipate that Netflix’s revenue will be $7.48 billion, up 17% from last year’s same quarter. Meanwhile, earnings per share are expected to be $2.55, up from $1.74 last year.
The most important metric, as always, is subscriber growth. What can we expect from Netflix stock in response to subscriber numbers (whether positive or negative)? The consensus is that between 3.5 million and 3.8 million new paid users will be added.
Analysts were concerned that subscriber growth would suffer if life “returned to normal” following the pandemic. Indeed, as some countries eased restrictions, Netflix only added 1.5 million subscribers in the third quarter. However, a return to 3.5 million would be a strong indication.
Earnings reports, as you know, aren’t just about numbers and data. Investors will also tune in to hear about the company’s plans.
What’s going on with Netflix gaming, in particular? Netflix acquired Night School, a video game studio, earlier this month. In addition, they hired Mike Verdu to lead Netflix’s gaming division (he previously worked at EA and Oculus).
Verdu has a grand plan to include video games in Netflix’s subscription, potentially attracting even more subscribers. With so much gaming activity behind the scenes in the previous quarter, investors will be hoping for new information during the earnings call.
Netflix Stock:What do analysts believe?
Before we go any further, let’s look at what Wall Street analysts say about Netflix stock ahead of the earnings report. Currently, 11 analysts rate the stock as a strong buy.’ Fourteen have a ‘buy’ rating, 14 have a ‘hold’ rating, and only two have sold or ‘underperform’ rating.
Piper Sandler analysts polled 10,000 US teenagers about their streaming habits. Netflix continues dominating the industry, accounting for 32% of daily viewing. This is higher than YouTube (30%), Disney+ (7%), and Amazon Prime (3%).
There has been much discussion about Netflix losing market share in the streaming wars, but this does not appear to be the case.
Netflix is expected to report its third-quarter earnings after the market close on Monday. The company has seen rapid subscriber growth in recent years, but there are some concerns that it may have peaked. Investors will be watching closely to see if Netflix can continue to add new subscribers at a fast pace and whether it can maintain its high levels of profitability.
Netflix is scheduled to release its quarterly results after the markets close on Monday, October 16th. It will be the first time the company reports under new CEO Reed Hastings, who took over from co-founder and former CEO Ted Sarandos in July. Hastings has been with Netflix since 1997, so he is no stranger to the streaming video business. However, investors will want to see how he handles the challenges facing Netflix in the current competitive environment. Netflix added 5 million members in the second quarter of this year, bringing its total membership base to 104 million worldwide. That was slightly below Wall Street’s expectations for 5.2 million net additions. The average revenue per user (ARPU) continues to rise as more people sign up for premium plans with more features. Net income for the quarter came in at $65 million, or 15 cents per share, compared with $40 million, or 9 cents per share, a year earlier. For fiscal 2017, Netflix expects a net income of $290 million-$330 million on revenue of $11 billion-$12 billion. Those numbers compare favorably with 2016 when Netflix earned a net income of $186 million on revenue of $8.9 billion.