Netflix is set to report earnings — investors are waiting for 1 key number
New Season out soon... We're talking Earnings Season, baby. Netflix is kicking it off on Thursday after the market closes. Investors have some thoughts before the numbers drop (don't they always). The stock has soared ahead of earnings, giving Netflix a larger market value than Verizon and post-Hamilton Disney.
- The bulls think 2020 is the year Netflix becomes a utility. Home-bingeing has never been more important and Netflix’s obsessive content-hoarding gives it a big leg up over rivals: it reportedly has 2 years worth of fresh movies/shows stashed away.
- The bears think 2020 is the year Netflix loses to subscripturation. A slew of new streamers have launched, and growth could slow on the competition/saturation. Netflix already takes up 72% of home streaming time.
Netflix and no chill... What investors really care about is 1 key nail-biter stat:
- Net new subscriber growth: Netflix absolutely crushed it in April, adding 15.8M new paying subscribers in the 1st quarter (more than double the 7.2M expected).
- Investors are waiting for another hit, but that's a tough act to follow. Netflix has forecast 7.5M net adds for this June quarter, but some bulls are expecting 10M-12M.
The thesis, the risk, and the result... Earnings expectations drive stock moves, so shares can be particularly volatile pre-earnings. Long or short term, investors formulate a thesis based on data and trends, then take a risk based on their projections. Investors who are bullish on Netflix could see their stock jump if new subscribers exceed expectations — and they'll likely see their stock drop if new subscribers fall short.