Netflix set for stock restructure

The video-on-demand service is looking to position itself ahead of a stock restructuring process.

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On 15 April, Netflix is due to post its first-quarter figures, and the markets have not set their expectation levels very high. The adjusted earnings per shares (EPS) are called lower, falling from $1.21 down to $0.968 while sales are due to increase from $1.485 billion up to $1.575 billion. The pre-tax profit, as a consequence, is called at $64.84 million – better than the previous quarter’s $45.516 million. On a like-for-like basis the year-on-year EPS for Q1 is expected to drop by 14.33%. Sales, on the other hand, are expected to jump by 24% but the pre-tax profit is due to fall by 27%.

Regardless of the less than impressive expectations the institutional assessment for the company still remains strong. Almost half of the firms ranking the business, 23, rate it as a buy, with 18 rating the company as a hold, and only six giving a sell recommendation. The current share price of $462, however, is already at a premium to the average twelve-month price target of $453 that is being targeted.

At the time of writing, Netflix is in the process of gaining investor approval to increase the shares in issue from 170 million up to 5 billion. Investors are expected to vote on this at the beginning of June. This corporate restructuring is expected to give the company more flexibility should they look to use equity rather than cash in any mergers and acquisitions activity.

In September 2014, and again in February, the shares have struggled and then sold off after trying to break above the $480 level. Once again, the shares are edging into overbought territory and with the possibility of stock restructuring not too far off in the distance it looks unlikely that it will be third time lucky.

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