That 'Gilmore Girls' binge helped set Netflix shares on fire
Now a decade later, Netflix is hustling to keep up with the industry it helped create. The next step: letting customers download movies onto their devices for offline playback.
Netflix has seen its stock stream to new highs in advance of the Net TV company's Q4 earnings announcement Wednesday.
Several factors have helped drive the stock including streaming provider's ability to continue to deliver new binge-worthy series including The Crown, new takes on A Series of Unfortunate Events and One Day at a Time and the reboot of Gilmore Girls: A Year in the Life.
The Los Gatos, Calif.-based Netflix isn't standing pat. Comedian Jerry Seinfeld will bring his Emmy-nominated Comedians In Cars Getting Coffee series to the service, Netflix announced Tuesday. Seinfeld will also film two new stand-up shows and develop additional programming, building on Netflix's goal to become a comedy destination -- it has already inked deals with Chris Rock and Dave Chappelle.
"Netflix continues to build a highly-moated business and has ample runway for growth as the largest global Internet television destination," said Stifel Analyst Scott Devitt in a note to investors Tuesday. Devitt rates Netflix stock as a Buy with a target price of $150.
Netflix (NFLX) shares were up slightly (0.68%) in pre-market trading Wednesday to $133.80. The stock hit an intraday high Tuesday of $135.40 before falling back. Share are up 23% over the last year and more than 34% over the last six months.
"Netflix is experiencing a furious rally since last quarter's positive report and its price jumped from $100 dollars a share to $133, having struggling to stay above the $100 line for a period in 2016," said Investing.com senior analyst Clement Thibault.
He recommends investors stay away from the stock. "The highly volatile nature of Netflix's price share come earnings season is another sign the market is just not settled on the company's valuation," Thibault said. "The industry has also evolved and is catching up, while little seems to have changed with Netflix itself."
What to look for in Netflix's fourth-quarter 2016 earnings, to be released Wednesday after the market closes:
SUBSCRIBER GROWTH: Netflix predicted growth of 4.5 million during the October-December quarter, which would bring its paying base of streaming subscribers to 87.8 million worldwide. International additions are expected to far outpace new U.S. subscribers. Netflix expected to add 3.35 million new paying international subs and 1.15 million U.S. subscribers.
Devitt expects the streaming TV company to do better than expected by adding 1.87 million U.S new subscribers and 3.55 million international new subscribers. With its growth rate, Netflix "should easily surpass the 100 (million) subscriber milestone during the year," he said.
EARNINGS FORECAST: Netflix forecasted fourth-quarter earnings of 13 cents, compared to 7 cents in the same period a year ago, with net income of $56 million, compared to $43 million a year ago. Wall Street expects 13 cents with net income of $58 million, according to analysts polled by S&P Global Market Intelligence.
REVENUE FORECAST: Analysts expect Netflix total revenue of about $2.5 billion, up 38% from last year. The company’s total streaming revenue forecast targets a 40% increase in Q4 revenue to $2.34 billion.
Mizuho Securities USA Managing Director Neil Doshi expects Netflix earnings and revenue to be in line with Wall Street expectations, but he improved his rating from Neutral to Buy with a price target of $152.
Why? Continued subscriber growth. In addition to new deals with pay-TV providers such as Comcast, he says, the growing number of streaming services such as Sling TV and DirecTV Now, "could benefit Netflix as people might opt for cutting the cord and would be more likely to subscribe to the Netflix service."
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