Welcome to Extreme Investor Network, where we bring you the latest insights and analysis on all things investing. Today, we’re diving into the unofficial start of the first-quarter reporting season for tech giants, beginning with Netflix after the bell on Thursday.
Netflix has had a stellar start to the year, with shares rallying nearly 26% and outperforming the S&P 500. The pressure is on for Netflix following two consecutive quarters of double-digit share price boosts. Last quarter, Netflix fell short of earnings expectations but exceeded revenue estimates and total membership numbers, adding 13.1 million subscribers.
For the first quarter, analysts expect Netflix to report earnings of $4.52 per share on approximately $9.28 billion in revenue. The closely-watched subscriber add figure is anticipated to come in at 4.59 million. Many on Wall Street are optimistic about Netflix’s performance, with several firms increasing their price targets heading into the earnings release.
One key factor to watch is Netflix’s recent crackdown on password sharing, which has helped boost subscriber numbers in past quarters. Although analysts expect these tailwinds to ease at some point this year, the crackdown is likely to continue boosting revenues and subscriber numbers at least in the first quarter. Wall Street analysts have raised their subscriber addition estimates in response to this initiative.
Despite Netflix’s strong performance and the benefits of paid sharing, some analysts urge caution. Issues such as high valuation levels and potential overestimation of long-term margin expectations have led to mixed sentiments among analysts.
In addition to paid sharing, investors will be keeping a close eye on comments related to Netflix’s ad-supported tier and partnerships, such as the one with WWE. Speculation around Netflix potentially acquiring NBA rights in other regions adds an additional layer of intrigue for investors.
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