Why You Should Be Paying Attention To Netflix’s Stock Chart
Loading the player… Get ready to grab your popcorn — we’re now less than a week away from Netflix ’s ( NFLX ) Q1 earnings report next Monday, April 18. In Tuesday’s session, the stock was able to retake a critical level — the 200-day line — that it has been struggling to recapture. Can it hold above that level Wednesday? Global Rollout Impacts Financials The video-streaming powerhouse’s bottom line is projected to drop 73% to three cents a share as amid rising costs for its global rollout. Netflix hasn’t seen that large an earnings decline since Q4 2012. Analysts expect revenue for the quarter to jump 25% to $1.97 billion, which would be Netflix’s fastest growth in the last four quarters. All Eyes On Subscriber Growth And maybe even more so than those figures, Wall Street will be looking closely at subscriber growth — a key metric for Netflix. In Q4, Netflix’s earnings and revenue beat estimates. So did its overall subscriber additions of 5.6 million, boosted by international markets. But its U.S. subscriber additions of 1.56 million missed expectations for 1.65 million new subscribers. The miss represented a slowdown in U.S. growth and sent shares tumbling over the next several weeks. Netflix may be able to redeem itself. A Baird survey out late last month points to “solid” U.S. additions in Q1, fueled by the recent launches of new seasons of original shows like “House of Cards” and “Daredevil.” Netflix itself has projected 6.1 million net additions for Q1 vs. 4.9 million a year earlier. Stock Retakes Key 200-Day Line Look for positive results to be a catalyst for the stock, which is currently trading 20% below its all-time high, reached in early December. Netflix has struggled to retake the 200-day line but finally climbed above that level Tuesday as it rallied 4.2%. Shares have risen more than 30% from their February low, hit in the wake of Netflix’s last quarterly report. Netflix Originals Seen As No. 1 In May, “grandfathered-in” subscribers will see a $2 price increase to $9.99 a month. One analyst sees the price increase creating a churn of just 3% to 4%, which is relatively low. One big reason why cord cutters may be unlikely to cut their Netflix subscriptions is the content. Morgan Stanley says that Netflix’s original content is now No. 1, putting it above Time Warner ( TWX )-owned HBO for the first time in the six years that Morgan Stanley has been tracking the video services. Still, the company faces stiff competition from a growing list of competitors besides HBO, including Hulu — co-owned by Walt Disney ( DIS ), 21st Century Fox ( FOXA ) and Comcast ( CMCSA ) — and Amazon ( AMZN ) Video. Will Disney Acquire Netflix? Netflix’s leadership in video streaming could make it a good acquisition target for Disney — or so said BTIG analyst Rich Greenfield in a report last week. He says that the buy would help the House of Mouse with succession planning and the erosion of its ABC and ESPN broadcast businesses. But whether or not Disney is actually interested in the move remains to be seen. Image provided by Shutterstock .