Netflix (NFLX) is set to announce its Q2 2021 earnings after the closing bell on Tuesday, with investors looking to see if the streaming giant can recover after missing analysts’ expectations by nearly 2 million subscribers in Q1.
Here’s what Wall Street is expecting from the company as compiled by Bloomberg versus how it performed in the same quarter last year.
Revenue: $7.32 billion expected versus $6.14 billion in Q2 2020
Earnings per share: $3.14 expected versus $1.59 in Q2 2020
Subscribers added: 1.12 million expected versus 10.09 million in Q2 2020
Netflix was one of the main pandemic era trades with the streaming giant seeing an explosion in user growth in 2020, as consumers around the world stayed indoors to stanch the spread of the coronavirus. But that led to a massive pull forward in new subscribers, leaving the company to deal with difficult comparisons for 2021, and throwing expectations out of whack.
In a note previewing Netflix’s Q2 earnings, BofA’s Nat Schindler said Q2 is likely to be “irrelevant” and that the company’s guidance will prove to be a key indicator for a return to normal subscriber growth.
“We don’t expect a beat or miss will be that important to investors and expect [Q3] guidance…will tell us more on whether or not [Netflix] can get back to its pre-COVID 25 million+ net subscriber adds per year trend,” he wrote in the analyst note.
Truist Securities’ Matthew Thornton offered a similar assessment of Netflix’s Q2 report, noting that expectations are muted for the quarter, but that the picture is likely to improve in the future as Netflix brings back big-name series in Q3, Q4, and into 2022.
“We think the content slate improves in [Q3] (‘Fear Street,’ ‘La Casa De Papel,’ several returning popular romcoms and unscripted series) and more so in [Q4] (‘Cobra Kai,’ ‘The Witcher,’ ‘La Casa De Papel,’ several high profile films) and into 2022 (‘Stranger Things,’ ‘Ozark’ ‘The Crown,’ ‘Bridgerton,’ others),” Thornton wrote.
Netflix is also branching out beyond its traditional streaming video offerings, looking to merchandise its top shows similar to Disney. Look no further than the company’s new Netflix.shop for proof of the burgeoning effort.
Then there are the reports that Netflix is jumping into the gaming category with the hire of EA and Oculus veteran Mike Verdu who is set to lead the company’s gaming effort. It’s clear Netflix is looking to grow its offerings, but that will take some time, and is unlikely to make a difference in the near-term.
For now, the company will have to prove that it can get back on an even growth footing.
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