Netflix Inc. What to do for an encore after surpassing 200 million paid subscribers in the first year of the COVID-19 pandemic?
The streaming leader is trying to monetize a massive new subscriber base from a year ago while against a host of competitors trying to get them out, like that of Walt Disney Co.
Disney +, Apple Inc.’s
AppleTV +, AT&T Inc.’s
Peacock and ViacomCBS Inc.
Supreme +. Netflix is expected to reveal how its results in the first quarter compare to that of that competitor with its earnings report Tuesday afternoon.
Trying to keep subscribers while making more money from them is a subtle balancing act that forces Netflix, which is considering licensing its content for extra revenue and potentially disrupting sharing. password. On top of that, it raised prices in the US and Canada to boost sales.
In fact, Netflix can’t expect anything to reach the pandemic-fueled blockbuster movie of a year ago, when it did. add a staggering 15.8 million new subscribers when a pandemic begins. Analysts expect less than half of that amount this quarter, while Netflix management is expected to add 6 million new paid subscribers.
There is one thing, however, indisputable: Consumers prefer Netflix content because of its larger margins than its competitors. A recent Morgan Stanley poll found that 39% of respondents consider it the best original show in terms of streaming, compared with 12% for Amazon Prime and just 7% for Disney +. The average US household currently pays for 2.5 online video services, up from 2.3 in 2020 and 1.8 in 2019, according to Survey by Morgan Stanley.
What to expect
Income: The average Netflix is expected to post earnings of $ 2.97 a share, up from $ 2.07 per share expected at the beginning of the quarter, based on 37 analysts surveyed by FactSet. . Estimize, a software platform that uses community sourcing from hedge fund executives, brokers, buyer analysts and others, calls for $ 2.57 per share. .
Revenue: Wall Street expects $ 7.14 billion in revenue from Netflix, according to 34 analysts polled by FactSet. This was slightly higher than the forecast of $ 7 billion at the beginning of the quarter. Estimize is expected to reach revenue of 7.17 billion USD. FactSet analysts project 6.47 million net additions to global payouts, down slightly from 6.65 million at the beginning of the quarter.
Ancient movement: Netflix shares have remained unchanged so far this year and are up 27% over the past 12 months, until the market closes on Wednesday. For comparison, the S&P 500 is broader
have increased by 10% and 48% respectively during those times.
What analysts are saying
With a third wave of COVID forced to close in key markets, analysts like Cowen’s John Blackledge expect Netflix’s engagement with consumers to remain high. He maintained a better rating and a price target of $ 675 per share in an April 11 note to clients.
Netflix could also “add more subscribers” by slightly reducing the password sharing feature because 45% of domestic users share passwords, according to a Cowen survey of 2,500 US consumers.
“We think that Netflix’s recent efforts could be a natural progression as biz matures in key markets,” Blackledge writes. “We also acknowledge that some sharing between respondents may occur within the same household.”
Stifel analyst Scott Devitt – who rates Netflix stock as a holding stock with a $ 550 price target – is more conservative in his assessment. He forecasts 6.1 million net additions of global payouts and just 3.2 million for the second quarter (compared with 4.3 million as Street expected) in an April 8 note.
Of the 37 Netflix analysts, 27 have a buy or overweight rating, five have a hold rating and five have a sell or underweight rating, with an average price target of $ 622.95.