Netflix expects Q1 EPS of $2.82 on revenue of $8.17 billion, JP Morgan forecasts its Q1 subscribers to come in at 1.5 million with Q2 net additions hitting 3.25 million.
Netflix is scheduled to announce Q1 earnings results after the market closes on Tuesday, April 18th.
Latest Results
The company reported Q4 earnings of $0.12 per diluted share, down from $1.33 a year earlier. Revenue for the quarter that ended Dec. 31 was $7.85 billion, up from $7.71 billion a year earlier.
Its global paid net additions stood at 7.66 million in Q4, compared with 8.28 million a year earlier.
Q1 Guidance
For Q1, Netflix said it expects EPS of $2.82 on revenue of $8.17 billion. Analysts are looking for EPS of $2.98 and revenue of $8.16 billion.
Minimizing Account Sharing: A Battle With Its Customers
Netflix announced a plan to prevent password sharing by forcing users to log in with their home network every 31 days in a now-deleted FAQ.
The company is in a complex position. It is struggling to earn the cash flow to justify its valuation and to grow with net income remaining all over the place and revenue for the company struggling to match inflation rates. More importantly, with the company using ads and household restrictions to restrict customers it's angering its existing base.
3 Reasons Behind Its Recent Price Cuts in More Than 100 Countries and Territories
Netflix has reduced prices in countries and territories across Asia, Latin America, Europe, the Middle East and Africa. Netflix is not reducing prices in North America or Western Europe, its most mature markets.
Three factors may have a major role to play in this decision. The first one is to create an opening to penetrate emerging markets, the second one is to lure users who lose access due to password-sharing rules. Last but not least, with its stronger-than-expected ad-model growth, the company can achieve two things, the first part is that subscribers to the ad-supported tier will be enticed to pay up for a tier with no commercials, and the other part is to attract new subscribers at a faster clip to offset the drag on ARPUs resulting from the growth of the ad-supported tier.
Analyst Opinions
JPMorgan analyst Doug Anmuth reiterated the outperform rating and a 12-month price target of $390 a share, he categorized advertising momentum as one of the main catalysts for his bullish call, and he expects Q1 subscribers to come in at 1.5 million with Q2 net additions hitting 3.25 million.
Bank of America analyst Jessica Reif Ehrlich reiterated the buy rating and per-share price target of $410 on Netflix. She thinks that the company will add subscribers in North America at a "significantly stronger" rate than the 100,000 Wall Street is expecting.
Oppenheimer analyst Jason Helfstein rates it as Outperform alongside a $415 price target. He sees $2-8 billion in revenue upside opportunity from the account sharing and believes that competitors appear more focused on profitability, suggesting we are past peak competition.