$Netflix(NFLX)$ is expected to report its third quarter 2024 financial results and business outlook post-market on 17 Oct 2024 (Thursday).
Earnings per share is expected to come in at $5.10.
Market is expecting NFLX to report its slowest subscriber growth in six quarters as the impact of cracking down on password sharing diminishes. Despite this, the streaming giant is seeing success with original content like “The Accident” and “The Perfect Couple,” among the most-watched titles in the U.S. during the quarter.
As subscriber growth slows, Netflix is looking to shift focus to other performance metrics, such as revenue growth and margins, and has announced that it will stop reporting subscriber data from 2025.
Double-Digit Revenue Growth Expected Due to Monetization From Advertising
The company is projecting double-digit revenue growth and an increase in margins as it moves toward advertising for monetization.
Netflix's Q3 revenue is expected to be $9.77 billion, rising 14.37% compared to the last year. Yet new additions are expected to be 4.27 million, 51.3% lower compared to the same period last year.
This will be higher than the previous Q2 2024 total of $8.6 billion.
NFLX maintained its position that ads were not yet making a meaningful revenue contribution. Greg Peters, Co-CEO of Netflix, has said previously that the company expects ad viewers to contribute at least as much revenue as ad-free viewers. In the earnings call, he revealed that average revenue per member (ARM) was not yet there.
An important part of achieving revenue parity is ensuring high engagement among ad-tier viewers. On that score. Netflix is also working to ensure brands are happy buying access to its audience. It is building an ad tech platform, which it expects to trial in Canada later this year. It will also broaden its programmatic reach to The Trade Desk, Google DV 360, and Magnite.
In the first half of 2024, people watched over 94 billion hours on Netflix — a reflection of how much our members love our stories and value our service.
Technical Analysis - MACD and MTF
Though NFLX have been trading above the short-term and long-term MA, but MACD is showing a potential downside, maybe because there is expectations that subscribers would slowed, so investors would be focusing on how much ads would help to contribute to NFLX revenue.
I would think we could watch how the market sentiment is like for NFLX during trading hours before the earnings, this should give us a gauge whether investors could consider before the earnings.
Summary
NFLX might surprise with better ads revenue contribution, while we could see slower growth in the user subscriptions. There might be higher amount of hours spend after the olympics in third quarter.
I would be monitoring the price action to see if can take a position.
Appreciate if you could share your thoughts in the comment section whether you think NFLX could surprise with a better revenue from the ads business.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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