Netflix Stock Price May Tumble Tomorrow! What Can We Expect From NFLX Earnings?
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- Netflix is due to launch its advertising tier shortly for $6.99 per month.
- Netflix reports earnings on Tuesday after the close.
- NFLX stock is down over 60% year to date.
Everyone loves a bargain, and Netflix (NFLX) is certainly offering a discount to investors. A reduction to the tune of 60% would usually be snapped up by shoppers, but in the case of NFLX stock, the large discount is still failing to attract much buying interest. Will the imminent release of earnings and the launch of its advertising tier change the investment thesis in the minds of investors? With the market backdrop remaining challenging, that may prove difficult, but there may be a short-term bounce to end the year as we approach earnings season to be followed by midterm elections. Stocks tend to like midterms and historically perform well following them.
Netflix stock news
Netflix will report earnings on Thursday after the close. Consensus earnings per share (EPS) forecasts are at $2.17, while revenue is expected to reach $7.85 billion. Earnings releases have not been kind to NFLX stock of late. Last time out was good with the stock bouncing higher, but in April Netflix stock collapsed 35% following earnings. As long-time critics of just how optimistic Wall Street analysts are, we note a report from Seeking Alpha. Netflix has been downgraded 29 times for EPS and 36 times for revenue, but those optimistic analysts still have a buy rating on the stock. Investors will also look for more info on the new advertising tier during the earnings conference call. We now know that the tier will cost $6.99, and guidance for subscriber growth from this new tier will be key. Netflix is expected to show subscriber growth of 1 million for the period.
The streaming giant has certainly rerated as investors are no longer willing to pay such a premium when the explosive growth phase is over. This stock has seen its P/E collapse in line with price this year.
Netflix (NFLX) P/E ratio
Netflix stock forecast
Netflix has been trying to bottom and has traded in a sideways range since August, so earnings could provide the catalysts for a breakout. As mentioned I believe the risk-reward lies in an upside surprise. Netflix has suffered this year already, and a lot of bad news can be assumed to already be in the price. Technically, a break higher would target $333, the earnings gap from April. There is a natural volume gap as a result. Breaking $214 will lead Netflix toward $165.90 and likely see a move to make a fresh yearly low.
Netflix daily chart
