Netflix looking to avoid Q3 repeat

The streaming service is at the cutting edge of a content-viewing shift from TV/PC consumers, and continues to seek stability as its Q4 update looms.

Netflix envelopes
Source: Bloomberg

On Tuesday 20 January Netflix is due to update the markets with its fourth-quarter figures. The company's adjusted earnings per share is expected to drop from $1.27 down to $0.736, but sales are called to increase from $1.409 billion up to $1.486 billion. However, the company’s pretax profits are expected to fall from $97.537 million down to $45.735 million.

Recent analysis conducted by Global Web Index concluded that Netflix could have as many as 54 million monthly users through its global virtual private network. This raises one or two questions, namely: how much password sharing is going on? Especially considering Netflix has 53 million subscribers. Slightly more worrying is the assessment that as many as 20 million of these monthly users could be from within China.

The debate surrounding Netflix continues to focus on hitting an appropriate number of subscribers, balancing the levels of original content that it produces and funding third party content.

Institutional support for the content provider remains broadly supportive, with 18 buys, 23 holds and only five sell recommendations. The current share price is considerably lower than the consensus price target of $412.74.

Ahead of the figures there will be some warranted nerves from investors as they cast their minds back to the performance of the shares at the last quarterly report, after they dropped from $448.04 down to $329.77 on the day.

Over the last twelve months any dip below $320 has encouraged the buyers back in.

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