What Big 'Squid Game' Profits Mean For Netflix

Investors have high expectations for Netflix Inc NFLX earnings after the company reportedly generated some major profits from its hit Korean survival TV series “Squid Game.”

On Tuesday, Bank of America analyst Nat Schindler took a deep dive into the impact “Squid Game” has had on Netflix and what investors can expect when the company reports third-quarter earnings this week.

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The Numbers: Bloomberg reported this week that “Squid Game” generated $891 million in impact value for Netflix, making it highly profitable given its $21-million production cost. In fact, Netflix’s stock price is up 8% since Sept. 17, the day “Squid Game” was released.

Schindler said “Squid Game” has been Netflix’s biggest series launch in history, reaching more than 11 million viewers. In fact, “Squid Game” may have singlehandedly boosted Netflix’s user numbers heading into the end of the third quarter.

In the last two weeks of the quarter, Bank of America reported that Netflix’s weekly worldwide app downloads increased by 19% and 39%, respectively.

In the first two weeks of the fourth quarter, app download growth continued to rise 35% year-over-year and 15% year-over year.

“The strength of recent content release and the market’s response increased our confidence in Netflix’s return to strong growth despite tough comps near term,” Schindler said.

Bank of America is projecting Netflix will report $2.71 in third-quarter EPS this week, beating consensus analyst estimates of $2.56. Analysts are also calling for $7.48 billion in revenue for the quarter, up 17.3% from a year ago.

Benzinga’s Take: It appears the release date for “Squid Game” will likely split the financial impact of the show in the third quarter and fourth quarter. However, with the stock price already up significantly since the show’s launch, much of the incremental financial benefit from the surprise hit show is likely already priced into Netflix shares.