It is now a well-known fact that Netflix Inc (NASDAQ:NFLX) had suffered some setbacks in the past few quarters, and that had affected the stock somewhat. In addition to that, the start of the so-called ‘streaming wars’ with the launch of Apple TV+ and Disney Plus, should also be looked upon as a major challenge.
Hence, the market is keenly looking forward to Netflix’s latest earnings report, which is going to be released on Tuesday. The company underperformed its peers which are included in the FAANG (Facebook, Amazon, Apple, Netflix, and Google) in 2019, and hence, another poor performance might not be welcomed by the market.
Key Metrics To Watch
In the previous quarter, Netflix failed to meet its own projections with regards to subscriber growth, and on top of that, it also spent massively on original content. The spending on original content raised the company’s debt burden, which is why even some Wall Street analysts had become a bit nervous.
However, analysts’ estimates for the quarter ended in December indicate that Netflix might actually turn a corner. It has been projected by analysts that the earnings per share are going to be $0.53, which reflects a year on year rise of as much as 75.5%.
On the other hand, estimates also suggest that the revenues for the quarter are going to hit $5.45 billion, which reflects a year on year rise of as much as 30.2%. The most bearish analyst has predicted earnings per share of $0.50, while the most bullish one has projected $0.68 per share. In this regard, it is worthwhile to note that despite its recent struggles, Netflix has been remarkably consistent with regards to beating earnings per share estimates.
It has beaten earnings per share estimates in each of the previous four quarters. The most closely watched metric is going to be net subscriber additions, and estimates indicate that it could decline by as much as 32.8%. But if it beats, then there’s no telling what might happen.