Netflix, the leading video streaming service, is set to release its latest quarterly earnings report tomorrow, Thursday, October 17th, 2024. Analysts are expecting third-quarter earnings of $5.12 per share, up from $3.35 a year ago, with revenue projected at $9.769 billion, compared to $8.541 billion the same period last year.
A key metric that has consistently been a critical factor for Netflix is net subscriber additions and total subscribers. Net subscriber additions are expected to reach 3.989 million, with the majority of growth coming from the Asia-Pacific region. This marks a significant drop from the 8.763 million added in the same quarter last year. The total number of subscribers is forecast to reach 281.44 million, up from 247.15 million in the third quarter of the previous year.
It’s important to keep in mind that these subscriber figures could be impacted by Netflix's recent password-sharing crackdown. While the company has benefited from enforcing this policy, it could also face headwinds as some users cancel their subscriptions due to both the crackdown and rising subscription prices.
A member of the highly watched FAANG stocks, Netflix has outperformed its FAANG peers in the past year, as can be seen in the graphic below.
Let’s look deeper into Netflix’s performance in different time periods:
Now that we have a clear understanding of Netflix's operating metrics and how it compares to its peers, let’s dive into a deeper analysis of the company from a technical, fundamental, and sentiment perspective using Trading Central’s tools.
Netflix (NFLX) is currently in an uptrend, with the price trading above the 50-day moving average and near the upper Bollinger Band, signaling strength in the trend.
The stock is approaching a key resistance level at 745.00, and a breakout above this could lead to further gains toward 760.00. However, if this resistance holds, a pullback to the support level at 679.00 is possible.
Momentum indicators like the RSI and MACD are neutral, suggesting no immediate overbought or oversold conditions, and the stock may consolidate before making a decisive move.
Netflix (NFLX) currently has a Quantamental Rating of 60/100, indicating strong fundamentals compared to peers in its industry group. The stock performs well in Quality (86), and Momentum (84) factors but scores lower in Value (24).
The impressive Quality and Momentum scores indicate the company’s profitability ratios, leverage ratios, and operating margins are superior relative to industry peers while also showcasing very strong and sustained price upward movement in the previous 3 and 12 months (as per the price performance graphic shown earlier). Meanwhile, Netflix’s low value score demonstrates that the company is exhibiting elevated price ratios and valuation multiples relative to industry peers.
As a large-cap growth stock, Netflix has thrived in the current expansionary economy but could face challenges if macroeconomic conditions change. In a peer comparison, Netflix remains competitive, maintaining a similar Quantamental Rating to other leading companies in the media and diversified leaders category.
The sentiment analysis for Netflix (NFLX) indicates a bearish outlook with a sentiment score of 31/100, signaling a strong negative sentiment in the market. The confidence index is marked as high, suggesting that the bearish sentiment is reliable. Additionally, the low subjectivity score of 19/100 indicates that the sentiment is based on objective data rather than emotions or speculative influences. Overall, the combination of a bearish signal, low sentiment score, and high confidence suggests a cautious approach to Netflix at this time, as the market is currently skewed towards negativity.
Despite strong fundamentals, Netflix faces potential challenges with subscriber growth, elevated valuations, and bearish market sentiment. Investors should remain cautious as these factors could weigh on the stock's performance in the near term.
