Netflix Q1 2024 earnings: the battle for dominance

When will Netflix report its latest earnings?

Netflix is scheduled to report its first quarter (Q1) 2024 earnings after the market closes on Thursday, 18 April 2024.

Subscriber surge shocks Wall Street

During its Q4 2023 earnings report, Netflix surprised investors by adding 13.1 million new subscribers, surpassing the 8.76 million additions it reported in Q3 and easily beating Wall Street's expectations of 8 million to 9 million.

The company reported revenues of $8.83 billion during the quarter, up 12% year over year. Reported EPS of $2.11 was lower than the $2.22 expected, largely due to a $239 million non-cash unrealised loss from FX measurement on Euro-denominated debt.

A letter to shareholders

In a letter to shareholders, Netflix noted, “We believe there is plenty of room for growth ahead as streaming expands, and our north star remains the same: to thrill members with our entertainment. If we can continue to improve Netflix faster than the competition, we’ll have an increasingly valuable business – for consumers, creators and shareholders."

Expectations for Q1 earnings

Netflix operates within a lucrative market, with potential revenue opportunities in pay TV, film, games, and branded advertising amounting to over $600 billion. Despite its success, Netflix currently captures only 5% of this vast market. Moreover, its share of TV viewing is “still less than 10% in every country,” highlighting the significant room for growth.

Netflix forecast for Q1 2024

Netflix's year of remarkable growth

Surging revenues

• Current Quarter (Q1 2024): $9.65 billion
• Previous Quarter (Q4 2023): $8.83 billion

EPS takes a leap

• Diluted EPS Q1 2024: $4.49
• Diluted EPS Q4 2023: $2.11

Net income: a strong uptrend

• Q1 2024 Net income: $1.976 billion
• Q4 2023 Net income: $938 million

Netflix sales revenue

Key points to watch: Netflix's subscriber dynamics

• Q1 2024 forecast: Netflix anticipates slower customer growth in Q1 2024 compared to Q4 2023, attributing the slowdown to seasonal trends and a pull-forward effect from Q4's robust growth, with Wall Street predicting a 4.31 million customer increase
• Ad-supported plan impact: Following the previous year's introduction of a lower-priced, ad-supported subscription option, observers are eager to assess its role in driving both new memberships and advertising revenue
• Password sharing policy: The effectiveness of Netflix's intensified efforts to curb password sharing, examining potential impacts on subscription numbers and profitability, remains a focal point
• Pricing strategy effects: In light of recent price hikes, there's considerable interest in determining whether the increased costs have influenced subscriber acquisition and retention, potentially pushing users towards more affordable alternatives.

Competitive landscape

While Netflix has deservedly earned the title of the King of Streaming, competition in the streaming industry remains intense from names such as Disney and Warner Brothers. Outside of the streaming industry, Netflix is also facing stiff competition from linear TV, YouTube, and TikTok, to name but a few.

Streaming wars: Netflix leads, Warner Bros. Discovery lags with 5% decline

Netflix technical analysis

Netflix's share price dropped over 75% from the high of $700.99 it reached in November 2021 to a low of $162.71 by May 2022, as surging interest rates plunged tech stocks into a downturn, and the company experienced subscriber losses. This period is now well and truly in the past, and after a resurgence akin to that of Lazarus over the past twenty-one months, Netflix’s share price is now just 12% off its all-time high.

Netflix weekly chart

The daily chart below illustrates that the rally from the October 2023 low of $344.73 has continued within a bullish trend channel. On the downside, support is identified at $595, a key level where we might anticipate the emergence of dip buyers. It is crucial for this support level to remain in place to sustain the upward trend. On the upside, channel resistance is found at $690, just beneath the all-time high of $700.99, marking a plausible point for the execution of profit-taking sell orders.

Netflix daily chart

• ^{Source TradingView. The figures stated are as of 10 April 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}