Netflix: Will results be OK, or cause a Spanish Inquisition?


Fans of the legendary comedic troupe Monty Python’s Flying Circus can now rejoice in that nearly every one of the group’s movies, live performance videos, and all four seasons of the its groundbreaking British TV series, is now streaming on Netflix.

That’s all well and good for those who love Monty Python’s humor. But to borrow from one of Monty Python’s most famous sketches, Netflix could face its own Spanish Inquisition depending on how the streaming TV giant’s upcoming quarterly results turn out.

Netflix is scheduled to deliver its third-quarter results after the stock market closes Tuesday. Wall Street analysts are forecasting Netflix to post a profit of 68 cents a share on revenue of $4 billion, while Netflix has said it expects to earn 68 cents a share on $3.98 billion in sales. During the third quarter of 2017, Netflix earned 29 cents a share on revenue of $2.99 billion.

But while earnings and sales growth are nice, what drives those results are Netflix’s subscribers and their monthly subscription fees.

Netflix expected to add 5 million subscribers during July, August and September, with 650,000 of those coming from the United States, and the remaining 4.35 million from Netflix’s international markets. If Netflix hits that 5 million figure, that would give it 135.14 million subscribers around the world.

But if it falls short, Netflix will likely see a backlash like it did three months ago, when Netflix added 5.15 million total subscribers during the second quarter. That amount missed the company’s target forecast by more than 1 million subscribers. At that time, Netflix Chief Executive Reed Hastings sounded not too concerned about the subscriber miss, saying on a conference call, “We’ve seen this movie before.”

Netflix’s shares fell more than 5 percent the day after its second-quarter report, and the company’s stock price has given up more than 15 percent over the past three months. However, even with Netflix’s recent stock swoon, the company’s shares are up by 77 percent since the start of the year.

UBS analyst Eric Sheridan said, “debates remain front and center” over matters such as Netflix’s subscriber performance in the short term, and the amount of money the company spends on content and marketing.

However, Sheridan, who on Wednesday raised his price target on Netflix’s stock to $365 a share from $330, said in a research note, “A subscriber beat is likely going to be the driver with this set of results,” and he will be looking toward what the company forecasts for its fourth-quarter subscriber numbers.

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Source:: The Mercury News – Business

      

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