CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Netflix share price: Q2 2021 earnings preview

Netflix Q2 results are likely to see the weakest quarterly subscriber growth in at least five years.

When are the Netflix results?

Netflix, the world's leading streaming entertainment service, with 207.64 million paid memberships in over 190 countries, is scheduled to report quarter two (Q2) 2021 financial results on Tuesday 20 July at 1pm (Pacific time).

What to expect from Netflix Q2 2021 results?

Netflix results are expected to highlight a softer quarter for the group, when considering a high base of comparison in the previous year’s corresponding quarter. While 2020 saw a surge in appetite for on demand viewing, in lieu of Covid-19 and accompanying lockdown restrictions, the vaccine rollout in key markets has opened up activity options as society returns to some semblance of normality.

The group has guided the following in terms of the upcoming Q2 2021 results:

  • Revenue: $7.3 billion
  • Operating income: $1.865 billion
  • Operating margin: 25.5%
  • Global streaming paid memberships: 208.64 million
  • Global streaming paid net additions: 1 million

How to trade Netflix’s results

Netflix results always find an increased investor emphasis on the groups global streaming net additions figure. The group’s 1 million new (net) subscriber forecast is a conservative one relatively speaking. The lowest quarterly additions figure since 2016 was 2.2 million subscribers. Weaker subscriber growth does often follow a strong quarter. However, Q1 2021 was not a strong one and in fact it's the worst first quarter in at least five years.

In the last 21 quarters (dating back to Q1 2016), only seven of the net subscriber addition figures have fallen short of the group’s guidance, while 14 have exceeded guidance.

In times where realised subscriber numbers have fallen short of forecasts, traders have generally been rewarded for accumulating as weakness plays out. In times where actual subscriber numbers have exceeded forecasts, traders have been rewarded for buying into initial strength and locking in profits over the following few days.

In terms of an institutional view as of 14 July 2021, a Refinitiv poll of 45 analysts have an average rating of ‘buy’ for Netflix, with a long-term price target (mean) of $613.68.

Learn more on how to buy, sell and short Netflix shares

Netflix share price – technical view

The share price of Netflix remains in a broad trading range between levels $469.80 (support) and $563.00 (resistance). In the near term we have seen a ‘W’ shaped bullish price reversal near the aforementioned support area of this range. The move higher which has followed, has pushed the price of Netflix back into overbought territory.

Traders might prefer a pullback from overbought territory back towards the $510.00 level for long entry. The chart also highlights (blue circles) how oversold signals have been positive entry points into Netflix over the last 12 months or so.

Summary

  • Netflix is expected to see subscriber growth slow as lower pandemic restrictions ease viewing appetite
  • Net paid subscriber additions of 1 million are expected, the lowest quarterly growth figure in at least five years
  • Revenue is forecast at $7.3 billion for the quarter
  • Operating income is forecast at $1.865 billion for the quarter
  • The average broker rating for Netflix is ‘buy’
  • Technical traders might hope for a pullback from overbought territory to find long entry into the share

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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