Subsequent week, Netflix will announce its earnings report for Q3 2024 on Thursday seventeenth October. The streaming large tends to be the primary of the FAANGS to report earnings every quarter. The market is anticipating quarterly income of $9.77bn, and web earnings or income of $2.23bn. Earnings per share is predicted to return in a $5.16, considerably greater than the $4.88 for Q2.
Analysts have lately upgraded their expectations for Netflix’s EPS estimates and income estimates have additionally been upgraded a contact. Nevertheless, web earnings has been revised down barely, by 0.11%.
One other robust quarter for Netflix
Analysts expect a powerful set of outcomes for Netflix. If it may well meet analyst expectations, then EPS of $5.16 could be a progress price of 38.4% YoY. Revenues are forecast to rise 14.4% YoY, with web earnings anticipated to be greater than 33% greater on an annual foundation. The market is anticipating Netflix’s progress price to be stronger than its friends within the streaming sector, and if Netflix studies a powerful quarter of outcomes, it might solidify its place as the highest international streaming service and pulling additional away from the likes of Disney + and Paramount.
Netflix offers with one hand, however might take away with one other
From a content material perspective, Netflix has had one other stellar yr, with the brand new season of Bridgerton filling the hole left behind by the top of The Crown in 2023. Child Reindeer was a worldwide smash in 2024, and the brand new comedy sequence, No person Needs This, has carried out effectively with international audiences in latest weeks. There may be additionally a powerful content material schedule for 2025. Netflix will present the Christmas schedule of the Nationwide Soccer League for the primary time, and it’ll begin exhibiting wrestling on WWE Uncooked from 2025. Season 2 of Squid Recreation might be launched on December 26, and the brand new season of Stranger Issues is out subsequent yr. These main new content material releases might give Netflix the chance to lift costs from subsequent yr.
In comparison with its friends within the streaming sector, Netflix has not raised costs lately. Additionally, after a spate of modifications at Netflix, for instance, a crackdown on password sharing, introducing a less expensive tier of membership with adverts, and eliminating essentially the most fundamental stage of membership in lots of markets, the corporate must give you one thing new to spice up income within the coming quarters.
With Netflix investing closely in new content material and options, this might be time to lift costs. Presently a typical plan with out adverts is simply over $15 monthly for US customers, this might be raised to $17 monthly with a 12% enhance. We doubt that Netflix might justify elevating costs an excessive amount of greater than this stage at this stage.
Why Netflix can get away with a value enhance
A value enhance might not show too controversial, for instance, Netflix noticed its subscriber base develop when it cracked down on password sharing. Added to that, a Netflix subscription is taken into account a necessity for some, and an inexpensive luxurious for others, that saves on the price of an evening out or a visit to the cinema. Thus, we consider that value will increase might be absorbed effectively by a worldwide viewers hooked on Netflix reveals.
The corporate might select to announce any potential value will increase at a later date; nonetheless, we predict that if value hikes will not be formally introduced on the seventeenth, then they might tout the opportunity of the rise on subsequent week’s name.
Subscriber numbers to be scrapped in 2025
The subscriber numbers are additionally value noting, that is the penultimate report the place subscriber figures are included. Netflix will scrap reporting on subscriber numbers from 2025. Subscriber progress this yr has been robust, in Q2 subscriber figures rose by 8.05 million, and Netflix now has 277.65mn subscribers worldwide. The corporate expects there to be extra upside to subscriber numbers from the crackdown on password sharing, however we might be watching to see if there are indicators that this enhance to income is beginning to fade. Nevertheless, the subscriber metric is actually pointless at this stage as it will likely be scrapped from subsequent yr, so the main target might shift to income progress.
Report excessive inventory value forward of earnings report
The Netflix inventory value is at an attention-grabbing junction as we lead as much as this earnings report. The share value reached a report excessive of $733.40 on eleventh October, and it has been hovering round these highs ever since. The inventory value has risen by greater than 50% YTD, and the price-to-earnings ratio is a reasonably chunky 46.41. Nevertheless, the 12-month ahead P/E ratio is 34.9. This can be a signal that the market is anticipating robust earnings progress within the coming quarters, reasonably than a decline within the inventory value.
What analysts take into consideration Netflix
Analysts are typically bullish on the inventory, and nearly all of analysts have a ‘purchase’ suggestion for Netflix, though the inventory value has already outperformed the common goal value of $721.
Thus, there’s a danger that the market might be dissatisfied if Netflix can’t ship the products for final quarter. Total, we predict that the corporate has a excessive likelihood of assembly expectations for Q3 earnings, however a unfavourable shock might weigh closely on the share value.