Netflix shares rise slightly despite weak guidance, domestic subscriber miss

Netflix CEO Reed Hastings split the company in two in 2011, thinking that the growing ubiquity of high-speed Internet access would soon mean the end of their disruptive DVD mailing business. But neglecting the DVD business proved to be a mistake, and Netflix reversed course.

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Netflix will report fourth-quarter results after the closing bell on Tuesday.

Here’s what analysts are expecting:

  • Earnings per share: 53 cents expected, per Refinitiv estimates
  • Revenue: $5.45 billion expected, per Refinitiv
  • Domestic paid subscriber additions: 589,000 expected, per FactSet estimates
  • International paid subscriber additions: 7.17 million expected expected, per FactSet

The fourth quarter will mark Netflix’s first earnings report since the launch of new rival streaming services last fall. Analysts will be paying close attention to see if Disney+ and Apple TV+, which launched last November, will have any impact on Netflix’s results.

The streaming wars are expected to heat up even further when AT&T‘s WarnerMedia launches HBO Max in May and Comcast‘s NBCUniversal rolls out Peacock in the U.S. on July 15. So far, Netflix has said it welcomes the new competition.

Not only are the services competing for subscribers, but also for content. Netflix continues to outrank its rivals in terms of original content spending, recently offering $2 billion in debt to fund new projects and it expected to shell out $15 billion on content in 2019.

But analysts remain concerned about Netflix’s continued cash burn. The company also has to contend with the loss of much-loved TV series like “The Office” and “Friends”, which will soon move to rival streaming services.

Increasing competition and subscriber churn hurt Netflix’s stock in 2019, but it has shown signs of turning around. Shares of Netflix have climbed about 20% since reporting third quarter earnings in October of 2019 and Goldman Sachs analysts are bullish on the stock.

Disclosure: Peacock is the streaming service of NBCUniversal, parent company of CNBC. Comcast is the parent company of NBCUniversal.

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