Investors hope to see history repeat itself Netflix (NFLX -0.55%) this earning season. Shares of the leading premium video service have almost doubled over the past year, but are up only 45% in 2024. The stock has risen 35% in the last two and a half months of the year past, initially fueled by a third strike. – quarterly report.
Netflix is still in fashion before the red carpet of the earnings season. It will offer this year’s third quarter financials after the market closes on Thursday. Will shareholders get another exciting repeat, or are expectations too high now? With Netflix shares reaching another all-time high on Friday, it will take strong financial performance to maintain the gains.
Expectations are high
The Netflix guide offered in mid-July was mixed. The streaming pioneer expects revenue to rise 14% to $9.7 billion for the three months ending in September, a sequential step from the 17% year-over-year increase it delivered in the second quarter. The news gets better as we work our way through the income statement.
Netflix is targeting a sharp improvement in margins. Its forecast over the summer called for net income to rise 33% to $2.7 billion or $5.10 per share. Analysts have become a little more ambitious in the last three months. They are targeting a profit of $5.12 per share on nearly $9.8 billion in revenue.
The stock increasing by 98% in the last 365 days puts things in a different light. Netflix isn’t exactly priced at 37 times this year’s earnings. However, investors are kicking themselves for not buying a year ago at a forward earnings multiple that would have been in the teens. If the bottom line continues to outpace the modest jumps at the top, it doesn’t mean the rally is over.
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Change channels
Netflix isn’t afraid to mix things up. Two years ago this month, it introduced a cheaper plan of advertising support. It started cracking down on password sharing last year. It also hasn’t been afraid to follow the lead of linear television by airing new seasons of popular shows. If you wake up before Wednesday to catch the last two episodes of Love is blindYou know you’ll have to wait another week for the final.
Next year, mix things up for investors. Netflix announced in April that it will stop reporting subscriber numbers in 2025. It wants investors to focus on revenue growth instead, especially as cheaper ad-supported plans begin to collect ad revenue. in the money he makes. Subscriber numbers are also starting to get fuzzy as families start paying another $7.99 a month to add a person they share their account with, but who lives somewhere else. The business model has changed, and so will the report of subscriber numbers, starting with the first quarter of next year.
The market is obviously very rolling with the changes at the pioneer of streaming services stocks. Check the floating stock chart. Check analyst activity. At least five analysts raised their price targets over the past week, arriving ahead of Thursday’s financial update. These are not small moves. The increases ranged from $40 to $100 more than their previous goals.
Expectations are high. Netflix will have to make sure it goes higher.