in the last three months,
Stocks are completely moody.
Buoyed by strong third-quarter financial results and high hopes for the company’s new ad-supported subscription tier, the stock is up 35% from the day before its last earnings report, while the Nasdaq Composite is up 2%. bottom.
The rise set a high bar for the company’s fourth-quarter results, which are expected after Thursday’s close. Netflix (ticker: NFLX) is projecting earnings of $7.8 billion for him, up about 1% from a year ago, with earnings of 36 cents per share. Netflix says he expects 4.5 million net new subscribers in the quarter, bringing the total to about 226 million. Street Consensus estimates earnings of $7.9 billion, earnings of 55 cents per share, and net accretion of $4.6 million.
A key metric in any of Netflix’s previous quarters is guidance on next quarter’s net new subscriber growth. Last time, however, the company announced its decision to stop providing data on subscriber growth. You can see subscriber counts for Q4, but not after that.
Given its new initiative on both advertising and password sharing crackdowns, Netflix’s view is that revenue growth from here is a better growth indicator than subscriber growth. claims that subscriber growth in the fourth quarter will be well above consensus levels.
Current Street estimates for the March quarter are revenue of $8.1 billion, earnings per share of $2.99, and net new subscribers of 2.6 million. Even without Netflix’s help on the actual pace of subscriber growth, I think street analysts will continue to include numbers in their models.
Netflix previously warned that a strong US dollar could dent its December quarter earnings by about $1 billion, but the dollar’s gains have since moderated. Analysts believe the actual hit could be smaller, which could result in better-than-expected earnings growth over the period.
Investors want updates on both the progress of the company’s advertising program and its early efforts to reduce password sharing. Last quarter, Netflix said it expected a small contribution from advertising in the December quarter.
Wells Fargo analyst Stephen Cajor estimates the company added 4.8 million net new subscribers in the December quarter, but buy-side expectations are in the 5-5.5 million zone. We believe that any number under 5 million can be considered significant. Miss. Cahall also argues that advances in password sharing, not advertising, could be the biggest catalyst for Netflix’s share in the short term. He maintains an Overweight rating and his stock target is his $400.
Similarly, Oppenheimer analyst Jason Helfstein maintains an outperform rating and a price target of $400. In his view, the combination of new moves around advertising and password sharing, combined with slower spending on content by rivals, makes the stock offer an attractive risk/reward profile.
Write to Eric J. Savitz at email@example.com.