Netflix earnings will test waters for tech giants

Bloomberg

Beleaguered technology investors are looking to Netflix Inc. to stop the bleeding. The company’s earnings are poised to be even more closely watched than usual after last week’s market rout. Netflix is one of the first major US companies to report third-quarter results — and 2018’s best-performing FAANG stock — making it especially influential in the wake of a drubbing that hit the tech giants hard.
“Trends at Netflix, whether above or below expectations, will set the tone,” MKM Partners LLC analyst Rob Sanderson said in a note.
Netflix is also looking to redeem itself after missing subscriber estimates in the previous quarter, a whiff that sent the stock on its worst one-day tumble in two years. The shares haven’t managed to climb back to a record set in July, but they remain up 77 percent for the year. That’s a better showing than the rest of the FAANG cohort, which includes Facebook Inc., Amazon.com Inc., Apple Inc. and Google owner Alphabet Inc.
As always, the most important gauge of Netflix’s performance is subscriber growth. Wall Street expects Netflix to have added about 5.1 million subscribers in the third quarter, based on the average of seven estimates compiled by Bloomberg News. That’s 673,000 in the US and 4.42 million internationally.
For the fourth quarter, analysts are anticipating 1.64 million net subscriber additions in the US and 5.54 million internationally, based on five estimates.
It’s critical that Netflix remains on a steady growth curve, especially as rivals prepare their own services. AT&T Inc.’s WarnerMedia said last week that it would release a streaming platform in late 2019, aiming to capitalize on its massive trove of movies and TV shows. Walt Disney Co. also is preparing a streaming service for next year, promising hundreds of movies and thousands of TV episodes.
That’s bound to put pressure on Los Gatos, California-based Netflix, which charges between $8 and $14 a month in the US for its service.