Netflix stock historically has moved after its quarterly reports based on whether the streaming video service beat, missed or matched expectations for new subscribers. But that's not going to happen with next week's report.
For the first time ever, Netflix will not give a quarterly subscriber total when it releases first-quarter results after the market close April 17. It wants investors to focus on revenue and operating margin instead.
The company announced the change a year ago to give analysts time to adjust. It said revenue and operating margin are its primary financial metrics and engagement, or time spent on the service, is its best proxy for customer satisfaction.
Netflix ended 2024 with 301.63 million subscribers worldwide. And Netflix stock jumped 9.7% on Jan. 22 after the internet television network reported more subscribers than expected in the fourth quarter.
For the first quarter, analysts polled by FactSet expect the Los Gatos, Calif.-based company to earn $5.70 a share on revenue of $10.5 billion. That would translate to year-over-year growth of 8% in earnings and 12% in sales. It would be its slowest earnings and sales growth in seven quarters.
For the second quarter, Wall Street is modeling Netflix earnings of $6.27 a share, up 28%, on sales of $10.9 billion, up 14%.
Netflix Stock In Double-Bottom Base
Meanwhile, Netflix stock has formed a double-bottom base with a buy point of 998.70, according to IBD MarketSurge charts. However, investors are urged to exercise caution during the current market upheaval. Check IBD's Big Picture column to see whether it's a good time to buy.
On the stock market today, Netflix stock dropped 2.6% to close at 921.17.
Investors will be paying attention to Netflix's burgeoning advertising business when the company posts Q1 results.
Also, Netflix is not immune to the impacts of the U.S.-led trade war.
"Its subscription business could face pressure if international countries begin imposing retaliatory fees on U.S.-based services," Emarketer analyst Ross Benes said in a client note Thursday. "Trade wars breed uncertainty that places a premium on adaptability."
Netflix stock is on two IBD top stock watchlists: Leaderboard and Big Cap 20.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
