Netflix’s stock was in the red for 2021 as recently as August. Investors worried it may have lost its mojo as consumers flocked to newer streaming platforms like Disney+, Amazon Prime Video, Apple TV+, Paramount+, Peacock and HBO Max, which is owned by CNN parent WarnerMedia.
The question for Wall Street though is whether “Squid Game” will lead to even greater financial success for Netflix.
Analysts expect that third quarter revenue rose 17% from a year ago to $7.5 billion and that net income soared 47% to $1.2 billion, or $2.56 a share, according to forecasts tracked by data provider Refinitiv.
But the number investors will be watching most closely is Netflix’s subscriber count. The main reason that Netflix’s stock stalled earlier this year was due to concerns about slowing user growth.
Wall Street is estimating that Netflix added about 4 million subscribers in the third quarter, for a total of 213.3 million worldwide.
The company’s guidance will be key too. Analysts are predicting an even bigger surge in users in the fourth quarter — an increase of more than 8 million to 221.4 million.
Netflix’s stock typically thrives or dives after earnings because of the company’s subscriber outlook. And there may be added pressure on the company to deliver a bullish forecast.
That’s because many analysts are extremely upbeat on Netflix’s stock. Of the 45 who cover the company, 33 have buy ratings on the shares. If Netflix’s outlook disappoints, the stock could suffer a fate almost as violent as unlucky losers on “Squid Game.”
Tougher competition for Tesla?
Investors have rewarded Tesla’s success. The stock is up more than 15% in 2021 and the company is now worth $820 billion, making it the sixth most valuable company in the S&P 500.
But as impressive as that sounds, Wall Street is also starting to think that traditional automakers will soon eat into Tesla’s electric vehicle dominance.
Monday: US industrial production; Earnings from Albertsons, Philips and State Street; Apple product event
Tuesday: US housing starts; Earnings from Johnson & Johnson, Procter & Gamble, Travelers, United Airlines and Netflix
Wednesday: Euro area consumer price index; China interest rate decision; US Fed’s Beige Book; Earnings from Verizon, IBM and Tesla
Thursday: US jobless claims: US existing home sales; Earnings from AT&T, American Airlines, Southwest, Intel, Chipotle, Mattel and Snap
Friday: UK retail sales; Earnings from American Express and Honeywell