Market Overview

Netflix Investors: You Might Have Missed This Data Before Earnings


Netflix, Inc. (NASDAQ: NFLX) is scheduled to report its first quarter results on Wednesday after market close. The Estimize Consensus estimate for earnings per share is $0.77 with 97 estimates included. The Estimize Consensus estimate for revenue is $1.582 billion.

The Wall Street consensus estimate is calling for an earnings per share of $0.67 on revenue of $1.571 billion.

Speaking at a public conference call on Tuesday, Estimize's CEO Leigh Drogen said that his estimates are "incredibly far above" what the Street is expecting, implying the Street may expect another "sandbag" quarter.

Drogen added that the stock will tend to trade in the direction of the delta (between Estimize estimates and the Street's estimates), especially when the delta is "really big." He added that investors who have recognized the correlation have made a "ton of money" being long Netflix over the past week, despite expectations being "really high."

Related Link: Why This Trader Will Short Netflix Into Earnings

However, Drogen continued that he would be "very cautious" heading in to and coming out of the quarterly report and suggests against holding a large position in to the print.

From a fundamental perspective, Drogen noted that Netflix continues to face external threats, not only from HBO Now and other streaming services, but from online sites such as Popcorn Time that offer pirated TV shows in the form of torrents.

"We are seeing a ton of momentum for this thing, especially as the video content universe fractures with some content on Netflix and some on HBO and there is no one platform," Drogen said. "This is the one platform – except you get it all for free."

With that in mind, Drogen cautioned investors to follow stories like these that could pose a long-term risk to Netflix's business.


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