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Will Heightened Competition Hurt Netflix's (NFLX) Q3 Earnings?

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Netflix (NFLX - Free Report) is set to report third-quarter 2019 results on Oct 16.

Investors expect Netflix to provide a sneak peek into its content plans and spending strategy amid rising competition on the third-quarter earnings call.

Click here to know how the company’s overall Q3 performance is expected to be.

The company has been facing stiff competition in the streaming space from incumbents like Hulu, YouTube, and Amazon’s prime video. Upcoming services of established technology and media players including Apple (AAPL - Free Report) , Disney (DIS - Free Report) , AT&T and Comcast (CMCSA - Free Report) are likely to have hurt Netflix’s market share.

International streaming subscriber growth is a metric that would be keenly watched by investors. Management expects international streaming subscriber base to grow 22.3% year over year to 6.2 million. Notably, the company added 2.83 million paid members in the last reported quarter.

The Zacks Consensus Estimate for Net Subscription Additions - International Streaming is pegged at 6.082 million.

Further, the price hike in domestic and various overseas markets is expected to have driven average revenue per user (ARPU) in third-quarter 2019.

Additionally, Netflix has been spending aggressively to build its original show portfolio. Moreover, in order to sustain its dominant position, the company is spending heavily on marketing activities. These are expected to have negatively impacted free cash flow and profitability in the to-be-reported quarter.

Netflix, Inc. Price and EPS Surprise

Netflix, Inc. Price and EPS Surprise

Netflix, Inc. price-eps-surprise | Netflix, Inc. Quote

Key Developments in Q3

Netflix lost the streaming rights of Friends to WarnerMedia’s HBO Max and The Office to NBCUniversal during the quarter.

Additionally, the company acquired the streaming rights of Emmy-award winning comedy Seinfeld from its distributor Sony for five years beginning 2021.

Moreover, Netflix recently signed a multi-year deal with television writer-producers, David Benioff and D.B. Weiss, the names behind Game of Thrones, for creating movies and series.

Zacks Rank

Netflix currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

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