Stock Market Analysis

What To Expect From Netflix’s Earnings

The pandemic fueled Netflix’s subscriber growth, but investors want to know how the king of streaming is performing amidst growing competition?   

Netflix (NASDAQ: NFLX) shares are up 7% over the last month and have delivered an outstanding 470% return over the last five years. With Amazon (NASDAQ: AMZN) recently announcing that it will be creating the most expensive television series ever made, the ‘Lord of the Rings’ prequel, at an estimated cost of around $465 million, how long can Netflix defend its turf? Shareholders will be keen to ask Netflix how it intends to stay the leading streaming service on the earnings call on Tuesday.

Despite heightened competition from the likes of Disney+ (NYSE: DIS), Amazon Prime Video , and Apple TV+ (NASDAQ: AAPL), Netflix has maintained its streaming crown by consistently re-evaluating its market position. The content platform’s recent deal with Sony is a great example of this. 

Starting next year, all movies released by Sony Pictures will stream exclusively on Netflix following their theatrical showings releases. The deal is a big win for Netflix as it gives the streaming service exclusive content to films with a large fanbase, like ‘Spider-Man’, and gives it opportunities to strike new deals with other production houses.  

When is Netflix’s earnings date?

Netflix reports earnings for the first quarter of 2021 on Tuesday, 20th of April at 5:00 pm Eastern Time. 

How can I listen to Netflix’s earnings call?

To listen to the call and to access the transcript, as well as the shareholder’s letter and the financial statements for the quarter, all you need to do is go to Netflix’s investor relations page

What to expect from Netflix’s earnings

Netflix forecasts its Q1 adjusted earnings per share (EPS) to be $2.97, indicating year-over-year (YoY) growth of 89.2%. Revenue has been estimated at $7.13 billion, which would be an increase of 23.6% YoY. In the year-ago quarter, the company reported earnings of $1.57 per share on $5.77 billion in revenue. 

Even though Netflix is seen as a long-term winner in the video streaming space, there’s a number of factors worrying investors. These concerns include: 

1) Subscriber growth slowing down post-pandemic. Netflix forecasted a sharp decline in sub additions for Q1, estimating 6 million compared to 15.8 million in the same period last year. To keep shareholders happy, Netflix will need to at least meet these predictions for new users.

2) Content releases for 2021 being delayed due to lockdown restrictions. Even though this is still a worry for future releases, Netflix has managed to release great content during the pandemic. The company has grown its users by investing heavily in shows and movies like ‘Lupin’, ‘To All the Boys I’ve Loved Before 3’, and ‘Space Sweepers’, which have kept subscribers happy. 

3) Increasing competition from huge companies. Within a year-and-a-half of Disney+’s launch, the House of Mouse’s streaming service has captured 100 million subscribers, which is around half of Netflix’s total users. In addition, Disney+ is also significantly cheaper, priced at $7.99 per month compared to $13.99 for Netflix. 

Despite these concerns, Netflix’s diversified content portfolio, investments in production, and distribution of localized and foreign-language content have helped it expand its global footprint. For example, Spanish language content, in particular, has delivered excellent results. As of January this year, Money Heist has had a reach of 63.6% of all Netflix accounts in the UK since its release in 2017, proving that viewers enjoy engaging with shows originally made in different languages.

Netflix is also winning the Oscar race with 35 nominations for 16 movies, including ‘The Trial of the Chicago 7’, reflecting the popularity in the company’s content portfolio. Notably, Netflix’s ‘Mank’ got the most nominations, including best picture, director, actor, and supporting actress. 

If Netflix reports further slowing down of momentum for subscriber numbers on Tuesday, the company may be in trouble. Netflix will need to ensure investors that it will remain the top streaming platform by explaining its plans for further investment in foreign language content and more exclusive deals with production houses.

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Nicole Byrne
Nicole Byrne
Nicole is a writer here at MyWallSt. Her favorite stock is Etsy because she loves its original and handmade items. She believes people are going to stop buying mass-produced items and start purchasing ‘one of a kind’ fashions and furnishings. In a world of sameness, Etsy has the advantage.