Netflix (NASDAQ: NFLX) shares are up 7% over the last month and have delivered an outstanding 520% return over the last five years. But with Amazon (NASDAQ: AMZN) and Disney+ (NYSE: DIS) breathing down its neck, how long can Netflix defend its turf?
Shareholders will be keen to ask Netflix how it intends to stay the leading streaming service on the earnings call on Tuesday.
When is Netflix’s earnings date?
Netflix reports earnings for the first quarter of 2021 on Tuesday, 20th of July at 5:00 pm Eastern Time.
How can I listen to Netflix’s earnings call?
To listen to the call and to access the transcript, as well as the shareholder’s letter and the financial statements for the quarter, all you need to do is go to Netflix’s investor relations page.
What to expect from Netflix’s earnings
Netflix has already forecast that its Q2 quarterly growth will be its slowest since at least 2016. Adjusted earnings per share (EPS) are anticipated to be $3.14, while revenue has been estimated at $7.3 billion, which would be an increase from the $6.1 billion it took in the same period a year ago.
Even though Netflix is seen as a long-term winner in the video streaming space, there’s a number of factors worrying investors. These concerns include:
1) Subscriber growth slowing down post-pandemic. Netflix forecasted a sharp decline in sub additions for Q2, estimating 1 million. To keep shareholders happy, Netflix will need to at least meet these predictions for new users.
2) Content releases for 2021 being delayed due to lockdown restrictions. Even though this is still a worry for future releases, Netflix has managed to release great content during the pandemic. The company has grown its users by investing heavily in shows and movies like ‘Lupin’, ‘The Witcher’, and much more.
3) Increasing competition from huge companies. Within a year-and-a-half of Disney+’s launch, the House of Mouse’s streaming service has captured more than 100 million subscribers, which is around half of Netflix’s total users. In addition, Disney+ is also significantly cheaper.
Despite these concerns, Netflix’s diversified content portfolio, investments in production, and distribution of localized and foreign-language content have helped it expand its global footprint. For example, Spanish language content, in particular, has delivered excellent results. As of January this year, Money Heist has had a reach of 63.6% of all Netflix accounts in the UK since its release in 2017, proving that viewers enjoy engaging with shows originally made in different languages.
Netflix has also confirmed that it is making a long-awaited foray into gaming. Though it is still unclear how this is going to work, it remains a massive step for the company, and investors will want to know more from the earnings call.
If Netflix reports further slowing down of momentum for subscriber numbers tonight though, the company may be in trouble. Netflix will need to ensure investors that it will remain the top streaming platform by explaining its plans for further investment in foreign language content and more exclusive deals with production houses.
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Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.