Netflix, Daily & Weekly
It’s been a pleasant year for Netflix share holders with the shares surging over 2018 high’s with share price rising by nearly 55.5% from March bottom, compared to a gain of about 33% for the USA500. The price closed at $421.79 on Friday (April 17)below multi year’s high at 449.40 a day before.
But what is to expected from Netflix’s first Quarter earnings for 2020, which will be reported after the US Market close tomorrow?
This Earning Season will be closely monitored as it reveal more of economic damage from the virus and mitigation measures. Not surprising, blended earnings and revenue growth are coming in below the 5-year averages, according to Factset. Currently the estimate is for a -14.5% Q1 earnings drop, which if realized, would be the largest decline since Q3 2009, and would be the fourth decline out of the last five quarters.
Netflix in contrast, is one of the few companies that is expected to strongly benefitted from Covid-19 crisis.
The world’s leading media streaming company, Netflix has been holding up amid the market volatility caused by the coronavirus. The population strict distancing measures and the lockdown of nearly half the world, i.e. 3.9 billion people staying in their homes due to coronavirus, should had been beneficiary for Netflix. The pandemic should had gave a boost to the company over the past couple months, despite its inability to produce original content right now.
OnePoll specialised company in PR surveys and online quantitative research, stated in its latest reports that:
1.The average daily streaming per person in the US has doubled, with the average streaming reaching 8 hours a day.
2. The average person has logins for at least four streaming services.
Other recent reports showed that there was a spike in the Google searches for the term “Netflix” in the final 3 weeks of the first quarter, while Netflix and Disney+ are enjoying particularly strong gains.
However it will very interesting to see in tomorrow’s release, whether all this highly optimistic view of company’s earnings will exceed the results or whether it will come in line with the. The key question for the upcoming numbers is whether the production halt of streaming service’s original shows could show an initial impact in the Q1, even thought it is not expected to affect the company until later this year.
Also the revenue growth and management’s outlook for Q2 subscriber additions even with Disney and others vying for supremacy in the space, will likely play a key role in determining how investors respond.
In general, Netflix is expected to announce approximately 7.69 million new subscribers globally, i.e. 17% y/y rise. According to Zacks Investment Research, the internet video service is expected to have $1.62 in earnings per share during the first Quarter of 2020, which represents an extraordinary yearly change of 105%, since the reported EPS for the fiscal Quarter ending March 2019 was $0.79. Focus should also turn on revenues number which is expected to be around $5.70 billion, suggesting 26.1% growth from the figure reported in the year-earlier quarter.
Figure 1: [Nasdaq (2020)] Reprinted from Netflix, Inc. Analyst Forecasts Earnings Growth, retrieved from https://www.nasdaq.com/quotes/.
The consensus recommendation for the company is “buy”, corresponding to the majority of the 43 analysts polled by Refinitiv. The consensus from Refinitiv show an expected revenues of $6.063 billion.
Click here to access the HotForex Economic Calendar
Andria Pichidi
Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
