Growing stock market and strong earnings report could favor Netflix
20.01.2020, 14:12

Growing stock market and strong earnings report could favor Netflix


The S&P500, Nasdaq as well as French CAC40 closed last Friday at new records, and this week investors are focused on fresh earning reports of those limited number of companies which could still look fundamentally strong and technically more or less in uptrend, but still trading below their previous records.

Netflix is expected to release its 4Q2019 earnings report on January 21. According to barrons.com Netflix is expected to report 52 cents in earnings per share for the fourth quarter, up from 30 cents in the same quarter last year. Revenue is estimated at $5.5 billion, versus $4.2 billion a year earlier. Net new subscribers are expected to come in at 618,000 domestic and 7.2 million international. Netflix's guidance issued on Oct. 17 is for 51 cents in EPS, $5.4 billion in sales, and 7.6 million new subscribers.

According to official site Oscars.org (American Academy of motion picture arts and sciences), this year Netflix production scored 24 Oscar nominations which beat out Disney's 23 and Sony's 20 nominations. Netflix's nominations include Best Picture nominations for Martin Scorsese's The Irishman and Noah Baumbach's Marriage Story, Best Actor and Best Actress nominations for Adam Driver and for Scarlett Johansson in Marriage Story and for Jonathan Pryce in The Two Popes, Best Supporting Actor nominations for Anthony Hopkins and Al Pacino in The Irishman, along with many others.

Along with impressive last year recognition by Hollywood academics, Netflix has a powerful financial support, which is a major advantage versus competitors. Company's spending on production is at least twice bigger than the closest Amazon's.


Pic 1. Content spending is a Netflix strength

Source: Bloomberg


The cost of the monthly subscription of Netflix is $9 that is more than Disney's $7 and Apple's almost "discount" start price $5, but is the same as Amazon's $9 and less than HBO's $15.


Pic 2. Streaming costs (Netflix vs other competitors)

Source: Bloomberg


In the race of a crowded online streaming market Netflix performed quite well over the last five quarters when each of the quarter results outperform the previous one. Consensus forecast on Bloomberg for Q42019 is 5.45 billion of revenue, which is expected to be $0.21 billion above Q32019 and probably 30% better than a year ago.

Netflix reported third-quarter earnings on Oct. 16, posting earnings per share of $1.47 on $5.2 billion in revenue. Analysts had been expecting EPS of $1.03 and $5.2 billion in revenue. But Netflix's subscriber numbers tend to be most important for investors. It added 500,000 new U.S. subscribers and 6.3 million international users in 3Q2019-just below Wall Street estimates and its own guidance. Netflix stock rose 2.5% the following day.


Pic 3. Netflix Earnings (expectations and facts) since Sept 2018 until now.

Source: Investing.com


If the actual earnings released by Netflix this Tuesday will meet the forecasts along with continuous uptrend on stock markets a possible breakthrough of $345 per share resistance "threshold" could be possibly surpassed with a potential growth to March-July 2018 highs of $380-385.

On the other hand any disappointing earnings report and corrections on the stock market could dump Netflix shares to Jan. 5 lows of $321,2 and will require a closer attention due a potential sell off or risky downside movements.


Pic 4. Netflix shares price

Source: Investing.com

Quotes
Symbol Bid Ask Time
AUDUSD
EURUSD
GBPUSD
NZDUSD
USDCAD
USDCHF
USDJPY
XAGEUR
XAGUSD
XAUUSD

© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Bank
transfers
Feedback
Live Chat E-mail
Up
Choose your language / location