Preview | Wall Street is very cautious about Netflix's Q2 report! User growth is about to "explode"?
Wall Street expects Netflix's quarterly revenue to grow by 4% and earnings per share to be $2.83. It also anticipates a net addition of 1.8 million paid subscribers. However, some analysts argue that the company's long-term prospects have become a subject of controversy among investors due to high expectations.
The US stock earnings season is coming again! Can the streaming giant Netflix, which has already risen by 50% this year, continue to rise? Wall Street is very cautious!
After the US stock market closed on Wednesday, July 19th, Netflix is about to release its second-quarter earnings report.
It is widely expected that Netflix's quarterly revenue will increase by 4% YoY to $8.27 billion, but earnings per share will only be $2.83, a 12% YoY decrease; the number of new paid subscribers in the second quarter is expected to be 1.8 million, slightly higher than the 1.75 million in the first quarter.
Although these numbers may not be very satisfactory, analyst Tim Nollen from Macquarie still said, "(The market's) expectations for the second quarter of Netflix are already quite high."
This may be as Daniel Morgan, Senior Portfolio Manager at Synovus Trust, said, as streaming services such as Disney+ and HBO Max expand globally, Netflix's user growth has slowed down, and future growth may become more difficult due to increased competition.
"The long-term prospects of Netflix's business have sparked controversy among investors."
Moreover, due to the uncertainty of the US macroeconomy, there are reports that investors are becoming less willing to pay for streaming services.
Dark clouds are looming ahead, and what investors need to pay more attention to is whether Netflix's efforts to combat account sharing are effective in this environment? And how effective is the advertising model?
On this front, there is no need to be too pessimistic!
UBS analyst John Hodulik previously predicted that the model of paying extra for shared accounts may drive accelerated growth for Netflix in the second half of the year.
Citigroup also believes that the advertising model could bring Netflix an additional 82 million new users and an extra $10.6 billion in annual revenue.
Analyst Jason Helfstein from Oppenheimer also stated in a previous report that considering the advertising model of Netflix brings in more revenue per user than the ad-free basic version, more countries may cancel the basic version service like Canada in the future. The gradual phasing out of the basic version could increase Netflix's annual revenue by $4.4 billion.