Netflix Earnings Preview: Will the Password Crackdown and Hollywood Strikes Impact Numbers?
Netflix Earnings Preview: Will the Password Crackdown and Hollywood Strikes Impact Numbers?
NFLX is expected to post earnings of $3.49 per share, from $8.54 billion in revenue
- Netflix to report Q3 earnings on Wednesday after the bell.
- Subscriber growth amid password crack down is key.
- Volatility in stock price offers premium for options strategies.
Netflix (NFLX) is set to report third-quarter fiscal results on Wednesday, October 18, after the close. The streaming titan is up 22% this year, but that pales in comparison to the Nasdaq-100 (/NQ) gain of nearly 40%, which leaves the stock in an underdog position going into the end of the year.
Netflix third-quarter earnings preview
Investors expect to see NFLX post earnings of $3.49 per share on a GAAP basis from $8.54 billion in revenue. That would represent year-over-year growth of 15% and 8%, respectively.
The focus is on subscriber numbers, with Netflix expecting to add six million streamers. The crackdown on password sharing may help to achieve that target, although higher interest rates and the restart of student loan payments may throttle that number as consumers cut discretionary spending.
However, Netflix continues to promote its ad-supported plans that offer lower prices at the cost of seeing ads and removing the ability to download videos. Those plans should expand to more markets in the coming quarters. The Hollywood strikes likely helped Netflix's bottom line and may have increased free cash flows, albeit as a temporary phenomenon.
Still, the company is struggling with how investors view the stock. The days of double-digit revenue growth may be over, and the lofty multiples applied to its price will likely diminish over the coming years, especially if higher interest rates persist. Investors on the call will want to hear more about future price hikes and the path to keeping user growth sustained.
Trading Netflix earnings
The Oct. 20 expiration that contains the Oct. 18 earnings is pricing a 27.28-point expected move. The current implied volatility rank (IVR) is at 46.6, leaving investors with plenty of premium selling opportunity for an earnings play.
Netflix technical outlook
Last week, Netflix slipped below its 200-day simple Moving Average for the first time this year, and since September, prices have traded below its 26-day Exponential Moving Average. Overall, bulls have some work to do to counter the bearish technical setup. Will earnings help to reestablish a. bullish footing?
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.