Netflix Earning preview – Q3 2021

Did they choose the right way of salvation?

Market analyst – IFC Markets

Netflix, Inc. is planning to publish its earnings report on Tuesday, 10/19/2021 after market close. The report will be for the fiscal Quarter ending Sep 2021. Zacks Investment Research based on 20 analysts’ forecasts, expecting $2.56 EPS for the third quarter, while the EPS for the same quarter last year was $1.74. 

 

Netflix Earning preview - Q3 2021

 

IMPORTANT FACTORS TO WATCH

After the appearance of various rivals in the market, the trump card of Netflix was its production and distribution of localized, foreign-language content and an expanding international footprint and for that matter, they made a large investment. The latest example was the Korean series called “Squid Game (2021)”. After the removal of the Covid-19 restrictions, in the first quarter, they made an $8 billion investment for content, 41% more than a year ago. The budget for this year is about $17 billion. You could see the effect of this investment in the Emmy festival, where they won 44 awards.  

The main aim of spending such huge amounts is to get the viewer. According to the estimates, the company is expecting to have 212.68 million income from its paid subscriber. It can be 9% more than the same quarter of 2020. Zacks estimates for the same factor is 212.91 million income, a bit more than the company estimate. 

On the other hand, Netflix and its competitors like Disney+ by Disney DIS, HBO Max, Peacock, and Apple TV+, all are expecting to have lower new subscribers than a year ago, when because of pandemic and stay home orders, people had no choice but to sit down and use the TV streaming service. Now with reopenings, Cinemas in most countries restarted their services, which is most probably will affect the new subscription numbers. 

After all, Netflix as a most experienced TV streaming service learned which movies and series can save them in such a huge market. La Casa de Papel (aka Money Heist), Sex Education, Virgin River, and Never Have I Ever. Movies include Sweet Girl, Kissing Booth 3, Kate and Viv are the movies and series that can their savors and bring new subscribers, while old subscribers also looking forward to seeing what finally happened for their loved series. 

Another factor that must be important to follow is to see their regional sales. The Asia Pacific, Latin America, Europe, Middle East & Africa are different regions in the reports that must be analyzed closely. This is while for the North American market, the expected revenue is $3.25 billion, indicating 10.9% more than the second quarter. 

From the technical point of view and while Zacks Ranked Netflix shares as #3 (Hold), the Daily chart shows that bulls still have control of the market with RSI at 62 and an increasing OBV trend line. Important supports sit at 20 and 50 DMA, respectively at $613 and $581. Touching 50 DMA and increasing again is what we can see in the past months, which is expected to repeat. In case of a negative report, breaching 50 DMA will open the doors for 200DMA at $536.  

Netflix Earning preview - Q3 2021


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