Netflix (NFLX) reports its second-quarter results after the market closed on Thursday, but the streamer will again have to overcome some tall hurdles. Stock prices are approaching all-time highs.
“While a lot is priced into NFLX stock, we remain bullish given the significant growth opportunity ahead,” Morgan Stanley analyst Benjamin Swinburne wrote in a note ahead of the report.
Investors have praised the company’s expansion into sports and live events, while its advertising division continues to gain momentum, sending the stock soaring as a result, up about 33% since the start of the year.
At Wednesday’s close, Netflix stock was trading at $647.46 per share, little changed before Thursday’s earnings report. The stock closed at an all-time high of $691.69 on Nov. 17, 2021.
But the recent surge in stock prices is causing some anxiety on Wall Street.
“We remain cautious heading into Q2 2024 announcement,” Citi analyst Jason Bazinet wrote. “We maintain our neutral rating and $660 price target.”
Here’s what Wall Street expects from the report, according to Bloomberg consensus estimates:
-
Revenue: $9.53 billion (Netflix guidance: $9.49 billion) vs. $8.19 billion in Q2 2023
-
Earnings per share (EPS): $4.74 (Netflix guidance: $4.68) vs. $3.29 in Q2 2023
-
Net subscriber growth: 4.7 million vs. 5.9 million in Q2 2023
In May, Netflix Acquire streaming rights The company announced that as part of a three-season deal, it will broadcast two NFL games scheduled to air on Christmas Day. May Upfront Presentation The company’s advertising base has reached 40 million monthly active users worldwide. 15 million users The company revealed in November last year that its user base had increased by 35 million compared to the same period the previous year.
The growth of streamers The price was raised Ad-free subscription In an attempt The move is aimed at attracting more users to its ad-supported service. Crackdown on password sharing It also delivered revenue growth and increased subscriber numbers across its platforms. And over 9 million users Added in the first quarter.
But it hasn’t been an entirely smooth upward trajectory. In April, Netflix That’s what I said The company plans to stop reporting subscriber numbers early next year, raising concerns about long-term subscriber growth and potentially sending its shares plummeting.
Swinburne also warned that Netflix “has larger competitors to consider, particularly as its own business matures over the coming years. High-profile examples include Alphabet’s YouTube and Amazon’s Prime Video. Other sources of competition for consumers’ time, such as social media, are increasingly cluttered with short-form video but may be less visible.”
“Finally, the long-term risk is that as larger profits drive up our own profit margins, [a new army] Or maybe it will attract a lot of people,” he said. “In this respect, the potential for AI tools to dramatically lower the barrier to entry for premium professional video comes to mind.”
Despite the advertising division’s early success, analysts have warned that the effort still has a long way to go. Bank of America analyst Jessica Reif Ehrlich said her team sees advertising as “a long-term story. [does] We do not expect any significant revenue contribution until 2025.”
She cited a glut of new inventory as competitors launch ad-supported services and a “mixed advertising backdrop.” Still, the analyst reiterated her buy recommendation and raised her price target to $740 from $700.
“We have increased our target multiple to reflect the continued momentum of our underlying business,” she said. “We believe Netflix will continue to deliver outstanding performance, driven by its world-class brands, global subscriber base, innovator status and growing recognition among its growth drivers.”
Alexandra Canal She is a senior reporter at Yahoo Finance. Follow her on X translator, LinkedIn, Please email me at [email protected].
For the latest stock market news and in-depth analysis, including stock-moving events, click here.
Read the latest financial and business news from Yahoo Finance
