Netflix Stock: What to Watch Ahead of Q4 Earnings

Netflix Stock

On January 19, 2023, Netflix (NASDAQ:NFLX) is scheduled to release the financial results for the fourth quarter of 2022.

Netflix anticipates that its earnings for the fourth quarter will be 36 cents a share, indicating a decrease of 73% yearly. This could impact Netflix stock negatively, which is overvalued.

Over the previous month, the Consensus Estimate for earnings has increased by one cent per share, bringing the total to 45 cents per share. The number represents a drop of 66.2% compared to the same quarter the previous year.

The company anticipates that its overall revenues will rise by 0.9% year over year to reach $7.776 billion. The average estimate for revenue in the fourth quarter is now pegged at $7.84 billion, which indicates a gain of 1.67% from the figure recorded in the same period of the previous year.

In each of the most recent four quarters, Netflix’s earnings came in higher than the Zacks Consensus Estimate, with a surprising percentage that averaged 35.09%.

Let’s look at the current status of this announcement’s preparations.

Netflix Stock: Factors to Take Into Account

In comparison to the 8.28 million paid customers that were added in the same quarter a year earlier, Netflix projects that it will add 4.5 million paid subscribers in the fourth quarter of 2022.

Netflix anticipates ending the fourth quarter of 2022 with 227.59 million paid subscribers around the globe, representing a growth of 2.6% compared to the same period the previous year.

Paid memberships at the quarter’s conclusion are expected to be estimated at 227.42 million by the Zacks Consensus Estimate, which is a little lower than what management anticipated.

Netflix stock fell by nearly 35% in 2022 but is already up by 13% year-to-date.

Netflix has been experiencing intense competition in the streaming arena from companies such as Disney+ by Disney (NYSE:DIS), HBO Max, Paramount+, Apple TV+, and Amazon (NASDAQ:AMZN).

According to research published not too long ago by Parks Associates, the number of subscribers to Amazon Prime Video has now overtaken that of Netflix in the United States.

The latest ad-supported option offered by Netflix has similarly failed to enthuse the company’s customer base. The advertisement-supported plan, which was introduced on November 3rd, accounted for only 9% of new customers who signed up for Netflix in the United States during November.

In addition, competitors in the market for streaming services supported by advertisements, such as Disney and Comcast, will likely give Netflix a run for its money.

Disney, which is Netflix’s most direct competitor, is reaping the rewards of the ever-increasing popularity of its streaming service, Disney+, thanks to a robust content library and an affordable package offering.

Additionally, Disney is broadening its reach into overseas consumer markets. Compared to the 118.1 million paid customers that Disney+ had on October 2, 2021, Disney+ had 164.2 million paying subscribers as of October 1, 2022.

Peacock from Comcast also features a free-to-watch tier that is supported by advertisements and includes approximately 40,000 hours of material. Peacock is in a solid position to expand because of its extensive library of intellectual properties (IPs) and its many fresh developments.

Netflix is still the leader in the streaming market even though it has a more diverse content portfolio than its competitors. This is a result of the company’s heavy investments in the production and distribution of localized, foreign-language content and its expanding international footprint.

According to the estimates, the number of paid total streaming net membership gains will be 4.47 million.

It is anticipated that top-line growth was driven by Netflix’s increasing popularity in the Asia Pacific (APAC) and Latin America (LATAM) areas. This popularity is a direct result of Netflix’s diverse content offerings available in regional languages.

The consensus for APAC revenue in the fourth quarter of 2022 is projected at $892 million, representing a 2.4% increase from the previous year’s figure recorded in the same quarter.

The Consensus Estimate for LATAM revenues is currently estimated at $996 million, which indicates a growth of around 3.3% from the figure that was reported in the prior quarter.

In addition, the average estimate for sales in Europe, the Middle East, and Africa are now at $2.31 billion, which indicates a decrease of 8.6% from the figure reported in the same quarter one year earlier.

The Consensus Estimate for sales in the United States and Canada is now at $3.559 billion, which indicates an increase of 7.6% from the figure recorded in the same quarter the previous year.

Featured Image: Unsplash @ Mollie Sivaram

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About the author: Stephanie Bedard-Chateauneuf has over four years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on consumer stocks, cannabis stocks, tech stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.