Back to top

Image: Bigstock

Netflix Subscriber Growth, International Revenue & Other Key Q3 Estimates

Read MoreHide Full Article

Netflix (NFLX - Free Report) saw its stock price sink during morning trading Monday just one day before the firm is set to release its Q3 financial results. With some on Wall Street worried about the streaming TV giant amid increased competition, let’s look to see what investors should expect from Netflix’s quarterly subscriber growth and some other key estimates.

Overview

Shares of NFLX have plummeted over 16% during the last three months after the firm missed its own second-quarter subscriber estimates. With that said, Netflix is still the largest streaming TV firm and recently ended HBO’s (T - Free Report) 17-year streak at the top of the Emmy nomination list, which is pretty impressive for a company that first rolled out original content in 2013.

Going forward Netflix will continue to launch new shows and movies, some of which feature A-list Hollywood stars such as Dwayne “The Rock” Johnson. The company understands that big-name and critically acclaimed shows will help it take on the likes of Amazon (AMZN - Free Report) and soon enough Apple (AAPL - Free Report) , Disney (DIS - Free Report) , and AT&T.

 

Subscribers

Netflix fell short of its own subscriber projections by 1 million last quarter. The company still added 5.2 million new subscribers in Q2, but the big miss was alarming compared to the firm’s recent performance. Before the second quarter of 2018, NFLX had beat its own subscriber projections in seven out of the previous nine quarters. This included four straight beats of roughly 1 million or more.

Netflix itself seemed unconcerned by the miss and hardly even offered much of an explanation, other than it had happened before.

(The subscriber chart below comes from Netflix’s Q2 earnings release.)

 

Looking ahead, Netflix expects to add 650,000 subscribers in the U.S. and 4.35 million internationally in the third quarter. Netflix projects it will close the quarter with 135.14 million subscribers, which would mark over a 23% jump from the third-quarter of 2017 when the firm boasted 109.25 million subscribers.

Investors should note that our Non-Financial Metrics are calling for Netflix to add 669,450 U.S. subscribers and 4.40 million international members, both of which come in above Netflix’s own projections. Netflix had topped our NFM estimates for three straight quarters until its big Q2 miss.

Revenue

Moving on, our current Zacks Consensus Estimate is calling for Netflix’s Q3 revenues to climb by 33.7% to reach $3.99 billion. More specifically, the company’s domestic streaming revenues are projected to jump by roughly 24.5% to hit $1.93 billion, based on our NFM estimates.

Meanwhile, the firm’s Q3 international revenues are expected to soar 48% from $1.33 billion to $1.97 billion. Wall Street will likely pay even more attention to Netflix’s international revenues as that is where the majority of its growth is likely to come from going forward as the U.S. market becomes more and more saturated.

Earnings

Netflix stock is likely to trade based on its subscriber growth following its Q3 earnings release, which is due out after the market closes on Tuesday, October 16. But investors still need to know what to expect from its earnings.

NFLX is projected to see its adjusted quarterly earnings skyrocket 134.5% to reach $0.68 per share. It is worth noting that NFLX has earned one downward earnings estimate revision over the last seven days.

Netflix is currently a Zacks Rank #3 (Hold) based on its recent earnings revision trends and sports an “F” grade for Value and a “D” for Growth in our Style Scores system.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>

Published in