Netflix Inc. (NFLX.O) is likely to post its weakest quarterly revenue growth in nearly eight years, but the attention will be on its outlook in the run-up to new seasons of popular shows like “Stranger Things” and “Ozark.”
In an effort to acquire subscribers in a post-pandemic environment where it is competing with HBO Max (WBD.O), Amazon.com Inc (AMZN.O), and Walt Disney Business, the company is spending billions to deliver more original films and TV shows, as well as build mobile games (DIS.N).
According to estimates, Netflix could lose nearly a million customers as a result of its pullout from Russia.
According to Refinitiv statistics, analysts estimate Netflix to add 2.6 million customers in the first quarter and 2.7 million in the seasonally poor second quarter, which is still less than the average number of subscribers it added during the pandemic’s peak.
Analysts predict that the company’s subscriber growth will come from poorer countries where costs have been reduced, while higher fees in the US and Canada would fund new content.
“Over the longer term, most investors struggle to identify the catalyst for a significant re-acceleration of net additions in FY23 or beyond,” said Dan Morgan, Senior Portfolio Manager at Synovus Trust.
Netflix has purchased three game companies in order to diversify its revenue streams, although analysts do not expect a significant increase in revenue anytime soon.
Morningstar analyst Neil Macker said the initiative is only a “distraction” from the company’s primary business, adding, “We are not particularly sure that customers would genuinely consider video games as anything other than a minor function.”
Disney+, which started in late 2019 and intends to have 230 million to 260 million users in the next two years, is Netflix‘s most threatening rival. Subscriptions to HBO Max, Apple TV+, and Amazon Prime have also increased significantly.
While Netflix has previously received multiple Academy Award nominations, Apple is the first streaming firm to win a Best Picture Oscar for “CODA.”
* Analysts expect Netflix’s first-quarter revenue to increase 10.7% to $7.93 billion when the company releases earnings on April 19.
* Earnings per share are expected to be $2.90.
* This year, the stock has lost 43.4 percent of its value, making it the worst performer among the FAANG stocks.
* The stock has a “buy” or higher rating from 25 out of 46 analysts, while 18 have a “hold” rating and three have a “sell” or lower rating.
* The consensus price target is $500; the stock had a PT of $700 before to Q4 earnings.
** NFLX is presently trading at $334.17.