Proactive Investors - Netflix Inc (NASDAQ:NFLX, ETR:NFC) is set to announce its Q3 2024 earnings report next Thursday and analysts anticipate strong results for the streaming giant.
Market expectations point to quarterly revenue of $9.77 billion, net income of $2.23 billion, and earnings per share (EPS) of $5.16, a notable increase from $4.88 in Q2.
Most analysts have upgraded their expectations for Netflix’s EPS estimates and revenue estimates, although net income has been revised down slightly.
If Netflix meets these expectations, it would represent significant growth, according to Kathleen Brooks at XTB.
“The market is expecting Netflix’s growth rate to be stronger than its peers in the streaming sector, and if Netflix reports a strong quarter of results, it could solidify its position as the top global streaming service and pulling further away from the likes of Disney + and Paramount,” Brooks commented.
Content fuels potential for price increases
From a content perspective, Netflix has had a successful year. Shows like Bridgerton and Baby Reindeer were global hits, and upcoming releases such as Season 2 of Squid Game and a new season of Stranger Things in 2025 will continue to bolster its lineup.
Brooks points out that this could pave the way for Netflix to raise prices. “Netflix has not raised prices in recent years, but with its investment in new content, this could be a good time to do so,” she wrote. Brooks predicts a potential price increase to around $17 per month for a standard US plan, marking a 12% rise.
Despite the possible price hike, Brooks believes it wouldn’t deter many subscribers. “A Netflix subscription is considered a necessity for some, and an affordable luxury for others,” she wrote, emphasizing that many customers see it as a cost-effective alternative to entertainment options like going out to the movies.
Subscriber numbers and stock performance
This earnings report will be the penultimate quarter where Netflix reports subscriber numbers, as it plans to discontinue the metric in 2025. In Q2, the company added 8.05 million subscribers, bringing its global total to 277.65 million.
However, Brooks highlights that the focus is shifting away from subscriber growth. “The subscriber metric is essentially pointless at this stage,” she noted, as revenue growth takes center stage moving forward.
On the stock front, Netflix’s share price recently hit a record high of $733.40, up more than 50% year-to-date.
While analysts remain bullish, Brooks warns that high expectations could pose a risk. “There is a risk that the market could be disappointed if Netflix cannot deliver the goods for the last quarter.”