Netflix Stock Dropped After The Last 5 Quarters Of Results: What Are Netflix Earnings Expectations?

Streaming giant Netflix Inc NFLX is set to report second quarter earnings after market close Tuesday. Here’s a look at expectations and the history of Netflix stock from past results.

What Happened: Analysts are expecting Netflix to report revenue of $8.04 billion for the second quarter, according to data from Benzinga Pro. Analysts see the company reporting earnings per share of $2.96.

Netflix reported first quarter revenue of $7.87 billion in April, which missed a Street estimate of $7.93 billion. Fourth quarter revenue of $7.71 billion also missed analysts’ estimates.

The streaming company surprised many when it reported a loss of 200,000 subscribers in the first quarter, its first subscriber loss in over 10 years. Along with the subscriber loss, the company reported it was seeing slowing growth and forecasting a loss of two million subscribers in the second quarter.

All eyes will be on the subscriber figure reported by Netflix. If the company loses less than two million subscribers in the second quarter, it could be a positive for the company and shareholders. If Netflix reports a loss of more than two million subscribers, investors could head for the exit and look elsewhere.

Rival streaming companies like Paramount+ and HBO Max from Paramount Global PARAPARAA and Warner Bros. Discovery WBD respectively, reported subscriber gains in the first quarter.

This means the subscriber losses in the first quarter from Netflix weren’t a sector wide problem and could be a Netflix problem. Continued losses in the second quarter will be closely monitored by Wall Street.

Related Link: Traders Expect Massive Sell-Off In Netflix After Earnings 

Potential Positives: While the key to the second quarter earnings will be subscriber figures, Netflix could use the time to highlight other key items for the company.

Netflix is set to launch an ad-supported plan later this year that could bring in millions of additional customers. The company partnered with Microsoft Corporation MSFT on advertising efforts for the initiative.

Look for Netflix to share more details on the ad-supported plan, which could lead to more analyst reactions of subscriber growth for the new plan.

Netflix could also highlight “Stranger Things,” which has been a huge hit for the company. The season 4 premiere saw a record 287 million hours watched in its premiere week, which was at the end of the second quarter.

The final two episodes of season 4 were released on July 1, which fell in the third quarter, and saw 301.3 million hours watched in its premiere week. A spinoff of the show is planned after the final fifth season, which could be another item Netflix touches on. 

Netflix could highlight the show and also hit on the final two episodes success, which will be part of the third quarter earnings report.

Netflix was nominated for 105 Emmy Awards, trailing only to HBO with 108 nominations. The total includes 13 Emmy nominations for Stranger Things. The company's award success could be highlighted in the earnings report. 

Another potential area Netflix could highlight in an attempt to offset weakness in the report is an update on the second season of “Squid Game.” Netflix is bringing a new season of the massive hit to the platform in the future, and also a reality show.

No release dates have been provided, and an earnings report could be the time for Netflix to share an update.

Stock Reaction: Netflix shares fell significantly after the first quarter earnings report. The day after the company reported earnings, shares opened at $245.20, down 29.7% from the previous day’s close. By the end of the day on April 20, one day after reporting earnings, shares closed down 35.1%.

Netflix has a recent history of shares falling after earnings reports. Bespoke Investment Group reports the last time Netflix shares gained after an earnings report was in January 2021. Netflix shares have fallen in nine of the last 10 earnings reaction days since 2020.

NFLX Price Action: Netflix shares were trading up 1.36% at $193.52 on Tuesday, versus a 52-week range of $162.71 to $700.98, according to Benzinga Pro.