Subscriber numbers
Ranking #1 in the ‘what investors are watching’ chart as Netflix releases results should be subscriber numbers.
The lockdown surge in subscriptions had eased markedly by the third quarter, but, the market is expecting to see the numbers rise again for the fourth.
Netflix added 4mln, 1.5mln and 4.4mln new accounts respectively over the first three quarters of the year, whilst forecasting 8.5mln net additions in the fourth quarter, stockbroker AJ Bell noted in a preview.
The market leading streamer pitched expectations for the year end tally at 222mln paying users.
Netflix was the first mover and has spent a lot of cash keeping its nose in front of behemoth competitors which come in the form of Amazon, the world’s biggest retail company, and Disney, the world’s biggest entertainment company.
Amazon and Disney have closed the gap significant in the past two years, investors will be keeping a keen eye on how they all measured by at the end of 2021.
Spending and content
Content is king, in the digital marketplace that much is undeniable.
Convenience and novelty established the Netflix business when it was an innovative first mover, to keep it at the top the streamer invested heavily, across many languages in many territories around the globe.
It has come at a high price, and, is supported by borrowing. The quantum and rate of spending has been a uneasy subject for some investors.
New and renewed content needs to land well to keep subscribers and investors happy, too many expensive flops or a slowing of subscriber revenues will strike fear into the investor base.
Netflix carries some US$8bn of net debt and its content spending commitments are in the region of US$25bn.
“[It] might make a few people nervous as Netflix’s cashflow cooled a little in the first nine months of 2021, although the buy-and-build-and-add strategy has paid off so well so far that few are unlikely to be seriously concerned,” AJ Bell commented.
Gaming
Microsoft’s US$69bn takeover of Call of Duty parent Activision Blizzard, a move expected to bolster the Xbox Gamepass subscription service, put a thick underline beneath a clear message – that video game publishing is very big business.
Gaming, and specifically subscription-based gaming, has already been identified by Netflix as a potential source of growth.
The company recently launched a beta service in select territories in November.
Investors will be keen for details of the roll-out of the gaming platform and what role it plays in the streamer’s future.
Financials
Wall Street is expecting US$29.7bn of sales, with operating profit anticipated at US$6bn and consensus forecasts pitch earnings per share at US$10.74.
Ozarks
If you’re still thinking or reading about the stock by midnight, stop! One of the best shows on Netflix is about to drop.
The first instalment of the final series of Ozarks will be available for binging on Friday.
The tense crime drama starring Jason Bateman is highly recommended viewing.