Netflix (NFLX) Pricing Strategy Might Provide Earnings Surprise
$Netflix(NFLX)$ will be reporting its earnings results for the fourth quarter of 2024 on 21 Jan (Tuesday) after the market close.
Netflix’s Q4 sales are thought to have increased 14% to $10.12 billion, compared to $8.83 billion in the comparative quarter. More impressive, the streaming giant’s Q4 EPS is expected to climb 98% to $4.21 versus $2.11 per share a year ago. Netflix is slated to round out fiscal 2024 with a 15% increase in total sales at $38.86 billion, and a 64% spike in annual earnings with estimates at $19.77 per share versus EPS of $12.03 in 2023.
Netflix (NFLX) Last Earnings Positive Sentiment
NFLX have a 24.79% change since its last earnings call on 17 Oct 2024, the call reflects a positive outlook for Netflix with strong revenue growth, high engagement, and successful global content production. The expansion into advertising and new entertainment formats is promising, despite challenges such as membership decline in LatAm and impacts from Hollywood strikes.
Netflix expects to deliver 15% revenue growth and 6 percentage points of operating margin improvement in 2024. Healthy engagement with about 2 hours of viewing per member per day; big hits in Q3 like Perfect Couple and Monsters.
Producing original stories in over 50 countries with a team of top creative talent globally. Ads plan accounted for over 50% of sign-ups in ads countries; ads revenue expected to double year-over-year.
Investments in games, live events, and advertising to drive growth, including live sports and new game releases.
Notably, Netflix has exceeded sales estimates for five consecutive quarters and has surpassed earnings expectations in three of its last four quarterly reports with an average EPS surprise of 5.73%.
Netflix (NFLX) Optimistic Company Guidance
During the Netflix Q3 2024 earnings call, the company provided optimistic guidance for the future, highlighting key metrics and strategic priorities. They anticipate a 15% revenue growth and a 6 percentage point improvement in operating margins in 2025, driven primarily by membership growth and engagement, which stands at an average of two hours of viewing per member per day.
Netflix's content strategy includes expanding their slate across various regions, with new releases from the U.S., Brazil, Korea, and Germany, and popular shows like "Wednesday" and "Stranger Things" returning. Additionally, they plan to enhance their ad business, expecting it to double its revenue year-over-year, although from a small base.
Netflix also aims to continue refining their pricing strategy, emphasizing a balance between subscription and ad-supported plans. Despite past challenges, such as the Hollywood strikes impacting their content slate, the company is on track for normalization by 2025, with significant global engagement and a robust financial outlook.
Netflix (NFLX) Price Target
Based on 30 Wall Street analysts offering 12 month price targets for Netflix in the last 3 months. The average price target is $951.60 with a high forecast of $1,100.00 and a low forecast of $715.00. The average price target represents a 10.90% change from the last price of $858.10.
Technical Analysis - Exponential Moving Average
Netflix was up about 1.87% though there is still a daily downtrend, but we are seeing a nice size bounce but in relation to the lower high which is all the way up, I would say the bounce size is quite weak now, only about 25-30%.
An expected move on Netflix is about 7.5 to 8% to the upside, so this would put Netflix back to its all-time highs. So a 8% to the downside on Netflix would put it into a very nice buying zone which would sit roughly 775 and down to about 750.
This might be the price target I am looking to buy Netflix because when that happen, we could be seeing a daily oversold condition on the RSI.
It would be testing slightly below the 26 MA which has always been a decent buying point for Netflix throughout the entire rally phase.
Summary
Netflix might give a surprise earnings if we see their pricing strategy working well, but there is also a possibility of it dropping due to correction, which could give the investors an opportunity to buy in.
So I would be monitoring to see if I would like to add on more shares.
Appreciate if you could share your thoughts in the comment section whether you think Netflix would provide an earnings surprise due to a favorable pricing strategy.
@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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