Streaming giant Netflix Inc NFLX is set to report first-quarter financial results on Thursday, April 18, 2024, after market close.
Here's a look at earnings estimates, what analysts are saying and key items to watch.
Earnings Estimates: Analysts estimate Netflix will report first-quarter revenue of $9.275 billion, according to data from Benzinga Pro.
The streaming company reported revenue of $8.162 billion in last year's first quarter. The company has beaten Street estimates in two of the last four quarters, including the most recently reported fourth quarter.
Netflix said during its fourth-quarter earnings report that it expects first-quarter revenue to be $9.24 billion, which would be up 13.2% year-over-year.
Analysts expect the company to report first-quarter earnings per share of $4.52, up from $2.88 reported in the prior year's first quarter. The company has beaten earnings per share estimates from analysts in three of the last four quarters.
Netflix guidance calls for first-quarter earnings per share of $4.49.
The streaming company reported 13.12 million net subscriber adds in the fourth quarter, taking its total to 260.28 million. Netflix guidance said net subscriber adds would be down sequentially, but should come in higher than the 1.8 million net adds reported in the first quarter of 2023.
What Analysts Are Saying: The ad-supported plan and paid sharing crackdowns from Netflix could lead to more upside, according to Macquarie analyst Tim Nollen.
The analyst, who has an Outperform rating on the stock, said Netflix could have more upside when comparing his original estimates on ad-tier and paid sharing to where the company is now.
"Netflix's password-sharing crackdown on the heels of its ad tier launch helped drive nearly 30m sub adds in FY23," Nollen said.
The analyst, who raised the price target on Netflix from $595 to $685, said Netflix originally shared that around 100 million users were sharing their passwords, which could show more room for subscriber additions in 2024.
Nollen also said investors should watch the average revenue per member for Netflix, with the potential for increased monetization from its advertising tier and potential price increases for subscribers.
"Netflix's mid-tier ad-free price in the U.S. of $15.49 actually lags Hulu and Max now, and its base of ad tier users is growing, which provides more volume and pricing power in a generally improving ad market."
Nollen notes that Netflix has not raised prices on the Standard plan since January 2022.
"We believe a price increase may be imminent."
Estimates for Netflix subscriber growth in the first quarter could be too high according to a recent report from Piper Sandler analyst Matt Farrell.
The analyst, who has a Neutral rating, said sentiment for Netflix went from "better than feared" in the third quarter to "how big is the beat" now after the impressive fourth-quarter net add number.
"We believe investors are looking for material upside to the 4.5 million net adds number for Q1," Farrell said of a Street estimate.
The analyst raised the price target from $550 to $600 on Netflix.
Farrel said a key question is what inning of paid sharing Netflix is in at this point with some bulls suggesting there is more growth from paid sharing.
"Netflix has proven itself to be the clear leader in streaming, we would prefer for a pullback in order to get more constructive."
Here are other recent analyst ratings and price targets for Netflix.
Guggenheim: Buy rating, raised price target from $600 to $700
Morgan Stanley: Overweight rating, raised price target from $600 to $700
Barclays: Equal-weight rating, raised price target from $475 to $550
TD Cowen: Buy rating, raised price target from $600 to $725
JP Morgan: Overweight rating, raised price target from $610 to $650
Wedbush: Outperform rating, raised price target from $615 to $725
Related Link: Netflix Lands More Live Sports: How Success Of Docuseries Helped Pave The Way
Key Items to Watch: The net subscriber number will likely be the biggest item for investors and analysts to watch, while a subscriber price increase could also become the other big headline event from the first quarter results.
Another item to watch could be the discussion about the company's sports ambitions. Netflix has made its plan to have sports-adjacent content known, preferring to have one-off events and sports docuseries instead of bidding aggressively on full seasons of live sports.
The company had a live tennis event in March that it could highlight along with an upcoming live boxing event featuring a match between Mike Tyson and Jake Paul. The boxing match will take place on July 20 and could serve as one of the biggest sports events in company history.
Netflix has been known to take shots at other media companies and in the fourth quarter highlighted it was not interested in acquiring linear assets or picking up pieces from other media companies. Discussion on market share and competition could provide more insight into how Netflix dominates the sector.
NFLX Price Action: Netflix shares are up 1.89% to $618.47 on Tuesday versus a 52-week trading range of $315.62 to $639.
Read Next: Meghan Markle, Prince Harry Line Up New Projects With Netflix: Here’s What The Shows Are About
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