The Netflix (NFLX) stock price is hovering near its all-time high ahead of its quarterly results scheduled for Tuesday this week. The stock is trading at $628, which is about 31% above the lowest level this year. The shares have risen by more than 20% and lagged many tech firms like Alphabet and Facebook.
Netflix earnings preview
Netflix has made a strong comeback after it crashed sharply following its previous earnings release. In the second quarter, the company missed analysts’ estimates on key measures. For example, while its total revenue did better than estimated by about $17 million, its earnings per share missed by 19 cents.
The company also missed its member count. In the first quarter, the company said that it had more than 208 million members, which was lower than its own estimate of 210 million. In the following quarter, the company dramatically slowed its member number to just 1.54 million, which was lower than the median analysts’ estimate of 1.9 million. The company had added 10 million members in the same quarter in 2020.
Therefore, analysts expect that Netflix managed to turn the corner in the third quarter. For example, the Zacks consensus estimate is that the company’s earnings per share rose to $2.55 while its revenue rose to more than $7.47 billion, a 16.2% year-on-year increase. Most importantly, analysts expect the data will show that the company’s added more than 3.5 million members in the third quarter.
Netflix recent developments
There have been several key events in the past few weeks. For one, in this year’s Emmy awards, the company managed to scoop 44 awards, its highest number on record. This was an exemplary performance since the awards were significantly higher than those of HBO and Disney Plus.
The Netflix stock price has also recently reacted to the company’s entry into the gaming industry. Recently, the company acquired Oxenfree, a well-known game developer that is known for its narrative-driven titles. The company will continue investing in games as it seeks to diversify its results.
Meanwhile, the market will be watching the company’s hit show, Squid Game. In a recent note, the company estimates that Squid Game generated more than $900 million in value for the company. This was notable since the show cost the company about $21.4 million to produce.
Another key metric number that investors will be looking for is the company’s costs. With inflation rising, there is a likelihood that the company has suffered additional costs. As such, analysts will likely question the management about the potential for more price hikes.
Meanwhile, analysts are generally optimistic about the Netflix stock price. For example, in a recent note, analysts at Morgan Stanley noted that the shares could pop to $675. This was an upgrade from the previous estimate of $650. Similarly, those at Piper Sandler boosted the estimate from $600 to $705, while those at Truist noted that the shares would jump to $680.
Netflix stock price forecast
The Netflix stock price has made a strong recovery, having jumped by more than 30% from its lowest level in June. The stock also rose above the key resistance level at $593, which was the highest level in January. It has managed to rise above the 25-day and 50-day moving averages while the MACD has been in a bullish trend.
However, the stock seems like it has hit a key resistance ahead of earnings. As such, there is a likelihood that it will have a short-term pullback and then resume the bullish trend in the near term.
