Netflix share price: Q1 earnings preview

Netflix Q1 earnings are now forecast better than had been previously estimated, as the pandemic lockdown suggests more subscribers and usage for the streaming service.

When is Netflix earnings date?

Netflix, the Nasdaq-listed world-leading internet television network, will report its first quarter earnings for 2020 (Q1 2020) on Tuesday 21 April 2020.

Netflix results Q1 2020 earnings preview, what does ‘The Street’ expect?

Netflix ended the 2019 financial year strong, with over 167 million paid memberships from over 190 countries. In late January 2020, the group guided that it expects 7m net paid subscriber additions Q1 2020. However, since the societal disruption from the Covid-19 pandemic, suggestions are that net additions, usage and earnings could be higher than previously expected.

A consensus of estimates from Bloomberg surveyed analysts arrive at the following expectations for the Q1 2020 Netflix results:

How to trade the Netflix results

A Thomson Reuters poll of 43 analysts maintain a long-term average rating of buy for Netflix (as of 20 April 2020), with 16 of these analysts recommending a strong buy, 12 recommending a buy, nine hold, three sell and three with a strong sell recommendation on the stock.

Broker ratings

In total, 81% of IG clients with open positions on Netflix (as of 20 April 2020) expect the share price to rise in the near term, while 90% of IG clients with open positions on the company expect the price to fall.

Client sentiment

Netflix results: technical analysis

Having recently traded to new all-time high territory, the share price of Netflix remains in a long-term uptrend. In the short term, however, we see a bearish price reversal circled red (bearish engulfing candle pattern) from overbought territory.

The price reversal and the overbought signal suggest that a correction or short-term pullback is possible, but due to the longer-term uptrend, this is not considered a short sell opportunity.

Instead any pullback or short-term weakness towards the 392 level might be considered a long entry opportunity with the recent high at 456 the initial upside resistance target. While not usually considered a continuation pattern, we have drawn in an inverse head and shoulders pattern below the 392 level on the Netflix chart. The height of this consolidation projected provides a further (longer term) upside target for the share price of Netflix at 495.

Should the share price instead retrace too far and start trading below the 360 low, the bullish trend would need to be reassessed.

Summary

  • Q1 2020 revenue is forecast at $5.74 billion
  • Q1 2020 adjusted EPS is expected to be realised at $1.87
  • A Thomson’s Reuters poll of 43 analysts have an average long-term rating of buy for Netflix
  • In total, 81% of IG clients with open positions in Netflix expect the price to rise in the near term
  • The charts show the long-term price trend for Netflix to be up
  • There is a suggestion (overbought and bearish engulfing signal) that we could see a near-term pullback in the share price of Netflix
  • Trend followers would look at a pullback in the share price of Netflix as a long entry opportunity

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