Key Points
- Netflix is set to report Q3 earnings, with earnings per share expected at $5.12 and revenue projected at $9.76 billion.
- Following gains from Netflix’s password-sharing crackdown, subscribers are expected to remain flat.
- Netflix’s ad-supported model and potential live sports offerings are key areas of interest for investors.
- Netflix’s stock has risen 44% year to date and 95% over the past 12 months, reflecting strong market confidence.
Netflix is scheduled to report its third-quarter earnings after the market closes on Thursday. Wall Street is closely watching how the company’s evolving business strategies will impact its financials. Investors are particularly interested in the performance of Netflix’s advertising-supported model, the introduction of live sporting events, and the ongoing effects of its crackdown on password sharing. This earnings report will be one of the last times Netflix discloses subscriber numbers, as the company plans to shift its focus to revenue and other financial metrics in future reports.
Wall Street’s consensus estimates, based on data from LSEG, suggest Netflix is expected to post earnings per share (EPS) of $5.12. Revenue is projected to reach $9.76 billion for the quarter, while paid memberships are anticipated to hover around 282.15 million, according to StreetAccount. These numbers will be scrutinized, especially as Netflix transitions from reporting active subscriber growth to focusing on other performance indicators such as revenue growth and profitability.
Netflix’s efforts to curb password sharing have been a major focus in recent quarters, contributing to strong subscriber growth earlier in the year. However, the gains from this initiative appear to be leveling off, with analysts predicting little to no growth in active subscribers for the third quarter. Despite this, the crackdown has allowed Netflix to increase its paying user base, leading to the expectation that the company will soon announce price hikes to bolster revenue further.
New Street Research analyst Dan Salmon and Morgan Stanley analyst Benjamin Swinburne have both suggested that Netflix may unveil these price increases in the near future. Price hikes could help offset the stagnation in subscriber growth while boosting the company’s top line.
Despite the challenges in maintaining subscriber momentum, Netflix’s stock has performed exceptionally well this year. As of Wednesday’s market close, shares were up 44% year to date and nearly 95% over the past 12 months. This strong stock performance reflects investor confidence in Netflix’s ability to diversify its revenue streams, particularly through its ad-supported business model and potential new ventures such as live sports programming.
With this earnings report, investors will be looking for signals about how Netflix plans to continue driving growth as it shifts its focus away from subscriber numbers and toward other key financial metrics. Price hikes, ad revenue, and new content offerings will likely be pivotal in shaping the company’s future performance.
