Jump to content

Netflix Q4 earnings preview: slowest growth and lower margin

Recommended Posts

Netflix will announce its quarterly earnings on 19 January, 2023 after market close. The streaming giant is anticipated to announce the slowest year-over-year growth rate in the company's history.

NetflixSource: Bloomberg

Hebe Chen | Market Analyst, Melbourne | Publication date: Friday 13 January 2023 

Netflix’s earnings date?

Netflix will announce its quarterly earnings on 19 January 2023 after market close. The report will be for the fiscal quarter ending December 2022.

Netflix’s result preview: what to expect?

  • Slowest revenue growth

Based on Netflix's estimation, the world's leading streaming provider did not expect its quarter four (Q4) earnings to be impressive. In Q4 of 2022, the company's revenue is forecast to be very close to the level of the Q4, 2021, around $7.8 billion, which would result in the slowest year-over-year growth rate in the company's history.

Investors are also advised to prepare for an ultra-low margin in the upcoming report, partly due to the pattern that the Q4 is typically a heavy spending season for content and marketing expenditure. Furthermore, the decades-high US dollar is another major headwind that weighs on the global entertainment powerhouse's margin, as most of the company's costs are in US dollars, while over 60% of revenue is now coming from overseas

Netflix Q4 forecastSource: Netflix
Netflix revenueSource: Netflix


  • Low price strategy and new revenue structure

Netflix launched its lower-priced ad-supported plan in 12 countries in November as one of the most important strategic moves of 2022. For example, in the US, Netflix's subscription fee will start from $6.99 per month compared to the $9.99 for the existing plan.

The new and cheaper offer, although not anticipated to contribute materially in the fourth quarter, is poised to change Netflix's revenue structure fundamentally. The additional revenue streams including advertising and paid sharing will not only offset the risk of stalled user growth by introducing diverse offerings, but also increase the company's profitability. Netflix estimates the new ad-supported subscribers by the end of the year will be close to 200,000.

  • Competition

Despite delivering a "stark reversal" by growing its paid memberships by 9.4% year over year, the competition in the streaming industry that Netflix confronts is not going to get any easier. Disney, without question, is growing at a much faster pace than Netflix now and with more subscribers now. Moreover, in light of the wide-spreading cost-of-living crisis, the competition to win viewers' time and wallet will become more and more challenging for Netflix.

Netflix and DisneySource: Netflix and Disney report

Netflix share price

Since the second half of 2022, Netflix's stock price has been following an ascending trajectory, rising from its multi-year bottom to currently trade around $325. If this momentum stays valid after Q4’s earnings, the price will have great potential to move towards the 38.2% Fibonacci retracement level, sits around $368. On the flip side, a pullback from its current level could bring the psychological level at $300 in prospect. Further breaking through the moving tunnel would indicate a reversal of the bullish view.

Netflix weekly chartSource: IG

Netflix Earnings Summary

Netflix’s stock price has surged nearly 90% since the streaming giant reported its third-quarter earnings that exceeded the analysts’ expectations in a wide range. But even so, it might be too optimistic to expect that the woes are over. Either the tightened economic environment or the highly competitive industry setup will remain the major hurdle for the streaming king to overcome.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 17/05/23 10:51
  • Posts

    • Charting the Markets: 30 May FTSE 100 lower while DAX moves higher in early trading, and Dow looks to edge up following reports of debt ceiling deal. EUR/USD declining and USD/JPY holding firm, while GBP/USD begins to show signs of a higher low. Chris Beauchamp | Chief Market Analyst, London | Publication date: Tuesday 30 May 2023  Gold’s pullback slows down, while Brent crude turns lower and natural gas struggles to hold the 50-day MA.               This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.
    • Artificial intelligence (AI) is the new big hot topic.  Jeremy Naylor | Analyst, London | Publication date: Tuesday 30 May 2023  After NVIDIA last week reported a massive earnings and revenue beat, the company is now building Israel's most powerful AI supercomputer. It will cost hundreds of millions of dollars, but the computational power proposal is astonishing. The system, called Israel-1, is expected to deliver the performance of up to eight exaflops of AI computing. One exaflop is a standard measure of performance for a supercomputer. Exa is short for quintillion, a 1 followed by 18 zeros, which means one exaflop has the ability to perform one billion-billion calculations per second. This proposal from NVIDIA is to build a computer which can perform eight times that amount of calculations per second. The report suggests that the system will be partly operational by the end of 2023. (Video Transcript) More good news for NVIDIA NVIDIA, the artificial intelligence (AI) specialist which makes semiconductors for computers, reported some stellar earnings last week, both earnings and revenues up, and the outlook extremely robust as a result of its association with artificial intelligence or AI chips. Yesterday, NVIDIA came out with some more news. It's announced it is building Israel's most powerful AI semi-computer and the numbers are astonishing. The system is called Israel-1. It's expected to deliver the performance of up to eight exaflops of AI computing. Now, what is an exaflop? Well, that's a good question. One exaflop has the ability to perform one billion-billion calculations per second. Now, the system will cost hundreds of millions of dollars and will be partly operational by the end of 2023. This will mean that Israel through this computer will be able to engage far quicker with AI computing and it will help extra elements. Share price chart Let's take a look at what's happening in NVIDIA stock as we speak all-sessions on the IG platform. This is early trade. We are very, very close to going to a new all-time high and I suspect we could well end up seeing this creep up, even as we speak. It is currently trading at $398.74. This is a candle here where you can see we've gone at the bottom and we're currently at the top. There are no sellers in this stock. And I predict that sometime today, we will see a new all-time record high. Last week, NVIDIA stock jumped more than 25%, or around about a quarter of its total value, on the back of its quarterly earnings. And you can see at the moment we are punching higher as we speak. So, NVIDIA very much the front and center of AI computing and it's benefiting this morning from that news in Israel.
    • HP, all-sessions on the IG platform, is reporting its fiscal second quarter (Q2) earnings and revenue after tonight's US closing bell.    Jeremy Naylor | Analyst, London | Publication date: Tuesday 30 May 2023  The Street forecasts earnings of 76 cents per share, which would be a drop of about 29% from the same quarter a year ago. Revenue is expected to decline by 21% year-on-year to just over $13 billion, a performance that reflects the continuing fall in demand for PCs. Shares of the personal computer and printer maker have lost about 13% of their value over the past 12 months. But so far this year the stock has gained about 15% thanks to two consecutive better-than-expected quarterly reports. (Video Transcript) HP earnings HP is expected to report after the closing bell tonight. The Street forecasts earnings of $0.76 per share, which will be a drop of around 29% from the same quarter this time last year. Revenue is expected to drop by 21% year-on-year to just over $13 billion, a performance that reflects a continuing fall in PC demand. Now Hewlett Packard is all-sessions on the IG platform. The personal computer and printer maker's shares have lost about 13% of their value of the last 12 months so far this year. Share price chart If we have a look at the chart here for Hewlett Packard, you can see as of Friday's all-sessions close it beat the previous high, 3116 closing at 3136, the highest close that we've seen there in this market since the 29th of August last year. It's 15% up so far this year, thanks to two consecutive better than expected quarterly reports. Now, its spinoff company, HPE, which is Hewlett Packard Enterprise. It's not all-sessions on the platform, and a very different fate over the past 12 months, broadly unchanged over the period. The stock has lost around 7% in the last five months, despite beating estimates and raising forecasts three months ago. HPE also releasing its quarterly earnings tonight after the bell. Analysts anticipate a 9% rise in its earnings per share, $0.49. We've got a chart showing you what's expected. Revenue is also expected to rise by 7% to $7.31 billion. That stock is not all-sessions on the platform. You can trade all-sessions on Hewlett Packard after the bell on its figures.
  • Create New...