Netflix is about to report earnings – here’s what traders expect
Netflix is scheduled to come out with earnings after the bell Tuesday, the first FANG stock to report in a release that could set the tone for the rest of the high-momentum growth stocks.
Analysts expect the company to post earnings of $2.98 a share for the three months to March, according to FactSet, higher than $1.57 per share a year earlier. Sales are forecast to have grown to $7.1 billion from $5.77 billion last year.
"The expectation right now is that that should slow to about 20% in terms of revenue growth, and that would be the slowest quarter in eight quarters for Netflix but that's already baked into the stock," Gina Sanchez, CEO of Chantico Global and chief market strategist at Lido Advisors, told CNBC's "Trading Nation" on Tuesday.
The shares have underperformed the market this year. The stock is up 2% in 2021, below the 10% gain for the S&P 500.
Still, content is king and Sanchez said that still sets Netflix apart from its peers.
"Where Netflix is really shining is that their big bet on original content is paying off in the awards season, and I think that that's one of the reasons that they'll continue to add subscribers while subscriber exhaustion is starting to get high and you're seeing cancellations of folks who just don't want to maintain multiple accounts," she said.
Netflix earned 10 nominations for its original film "Mank" at this year's Oscars, broadcasting this Sunday. Its other original programming such as "The Crown" and "The Queen's Gambit" has also proven popular.
Mark Tepper, president of Strategic Wealth Partners, is also a fan of Netflix's content slate. He's watching for a high churn rate this quarter among other metrics but does not see that as likely.
"When you look at Netflix, it all comes down to subs added, churn and free cash flow, and they're going to end up going positive free cash flow much earlier than expected and the one thing that drives all three of those metrics is obviously content," he said during the same interview.
Tepper said Netflix has a competitive edge in the streaming space.
"When it comes to quality and quantity, I believe they really don't have much competition," he said. "Netflix is the go-to service in people's living rooms by a lot and I don't think that's going to change."
Disclosure: Lido Advisors and Strategic Wealth Partners hold NFLX.
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