2020 was a record-breaking year for Netflix, but did the company end the final quarter on a high-note? Here’s what to expect from Netflix’s earnings call.
Jan. 18, 2021
Netflix (NASDAQ: NFLX) shares have quadrupled in five years and delivered a jaw-dropping return of around 1,800% over the last decade (adjusted for stock splits). Investors are eagerly waiting to see how the company performed last quarter whilst it faced more competition than ever in the streaming market.
Just ahead of its earnings report on Tuesday, the media company surprised us all by announcing that it will be dropping an original film every week in 2021. The move will likely keep shareholders very happy as subscriber numbers should climb due to all the new content.
Titles such as ‘Don’t Look Up’ highlights Netflix’s ability to gather an A-list cast that includes Leonardo DiCaprio, Jonah Hill, and Meryl Streep. Furthermore, the streaming giant said it is going to be developing more child-friendly content, such as a ‘Teenage Mutant Ninja Turtles” reboot, which is likely to compete with Disney+. This new, wide breadth of content comes at an important time for Netflix, which has weathered a number of challenges over the past year — including price hikes to pandemic adjustments.
When is Netflix’s earnings date?
Netflix reports earnings for the fourth quarter of 2020 on Tuesday, 19th of January at 5:00 pm Eastern Time.
How can I listen to Netflix’s earnings call?
To listen to the call and to access the transcript, as well as the shareholder’s letter and the financial statements for the quarter, all you need to do is go to Netflix’s investor relations page.
What to expect from Netflix’s earnings
Netflix forecasts its fourth-quarter adjusted earnings per share (EPS) to come in at $1.35, indicating year-over-year (YoY) growth of 3.8%. Analysts expect EPS of $1.38, up 0.7% over the past month, and 6.2% growth YoY. Furthermore, total revenues are expected to be $6.57 billion, up 20.2% YoY.
Investors are aware that the streaming service has faced stiff competition this quarter from Disney+, HBO Max, and Amazon Prime Video. However, the company has also heavily invested in production and distribution resulting in a diversified content portfolio that has pleased Netflix users. Furthermore, pouring money into more foreign language content and expanding its international footprint meant that Netflix still dominates in the competitive streaming market. Netflix’s revenue from Europe, the Middle East, and Africa are forecasted at $2.09 billion, indicating 10.5% growth from the previous quarter.
As lockdown restrictions continue to plague the world, Netflix has really benefited from users’ increased viewing hours. The company expects to end the fourth quarter of 2020 with around 201.15 million paid subscribers, signaling growth of 20.4% YoY. To keep shareholders happy, Netflix will need to at least meet these subscriber number predictions.
As the company warned, its subscription growth rate did slow down in Q3 due to the easing of lockdown restrictions so Netflix may be in trouble if it reports further slowing down of momentum for subscriber numbers on Tuesday.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.