Netflix share price: 5 things to watch for in Q1 results

The streaming company has to answer these five questions before its Q1 earnings report.

Netflix logo before Netflix Q1 earnings Source: Bloomberg

Netflix’s share price may be impacted by a wide range of factors. Here are five questions that the streaming company has to answer before Netflix’s Q1 earnings report.

Will Netflix’s Q1 earnings be helped by adding more subscribers?

Netflix’s Q1 revenue could be impacted by an uptick in subscribers. The corporation has added 1.53 million US subscribers, which led to a boost in Netflix’s Q4 2018 revenue of $4.19 billion. The total of 139 million customers was the greatest in the streaming company’s history. Netflix projected last quarter that the number of viewers will top 148.16 million. Now investors will watch Netflix’s Q1 profits to see if that predicted customer growth will continue.

Did international expansion help Netflix’s Q1 revenue?

An increase in international subscribers helped Netflix’s earnings in the last quarter, with 7.31 million viewers outside the US. The corporation has added more international content and has offered lower-priced plans in India and Malaysia. Wall Street will watch Netflix’s Q1 profits to see if the international investments paid off.

Did pay hikes influence Netflix Q1 revenue?

The streaming corporation implemented two price increases in 2019 for US subscribers and Netflix’s Q1 profits may possibly be affected by the rate hikes. Though the subscription price changes are incremental increases of about $2, customers may stay with the lower-priced tier plans or switch to a more affordable streaming service.

Did extra spending on content affect Netflix's Q1 earnings?

Netflix maintains that price increases had to be implemented to cover the $8 billion the company spent on original content in 2018. As IG analyst Chris Beauchamp noted, Netflix’s Q1 earnings could be dependent on how much the company has to spend on content to maintain its high revenue. The company took on $10.36 billion of debt in 2018, but the expenses may have been worth it.

Movies like ‘Birdbox’ reportedly attracted 80 million viewers, and ‘Roma’ was an Academy-Award nominated film. It remains to be seen if the investment in thousands of hours of original content will impact Netflix’s Q1 profits.

Will streaming competition hurt Netflix’s Q1 profits?

Netflix’s success could ironically hurt the company as a number of streaming competitive services will launch to challenge the corporation, like Disney’s recently announced subscription video service, Disney +.

Disney + will eventually offer movies from its library, films from the ‘Star Wars’ franchise, and content from Netflix competitor Hulu. The service will also reportedly cost half of Netflix's subscription price. In addition to upcoming services, current rival streaming video companies like Amazon Prime Video could have an impact on Netflix’s Q1 revenue.

Netflix’s Q1 revenue will be closely watched to see if the corporation added more subscribers and revenue to justify its large debt and investment in original content.


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