Netflix Q4 earnings preview: slowest growth and lower margin
Netflix will announce its quarterly earnings on 19 January, 2023 after market close. The streaming giant is anticipated to announce the slowest year-over-year growth rate in the company's history.
Netflix’s earnings date?
Netflix will announce its quarterly earnings on 19 January 2023 after market close. The report will be for the fiscal quarter ending December 2022.
Netflix’s result preview: what to expect?
- Slowest revenue growth
Based on Netflix's estimation, the world's leading streaming provider did not expect its quarter four (Q4) earnings to be impressive. In Q4 of 2022, the company's revenue is forecast to be very close to the level of the Q4, 2021, around $7.8 billion, which would result in the slowest year-over-year growth rate in the company's history.
Investors are also advised to prepare for an ultra-low margin in the upcoming report, partly due to the pattern that the Q4 is typically a heavy spending season for content and marketing expenditure. Furthermore, the decades-high US dollar is another major headwind that weighs on the global entertainment powerhouse's margin, as most of the company's costs are in US dollars, while over 60% of revenue is now coming from overseas
- Low price strategy and new revenue structure
Netflix launched its lower-priced ad-supported plan in 12 countries in November as one of the most important strategic moves of 2022. For example, in the US, Netflix's subscription fee will start from $6.99 per month compared to the $9.99 for the existing plan.
The new and cheaper offer, although not anticipated to contribute materially in the fourth quarter, is poised to change Netflix's revenue structure fundamentally. The additional revenue streams including advertising and paid sharing will not only offset the risk of stalled user growth by introducing diverse offerings, but also increase the company's profitability. Netflix estimates the new ad-supported subscribers by the end of the year will be close to 200,000.
- Competition
Despite delivering a "stark reversal" by growing its paid memberships by 9.4% year over year, the competition in the streaming industry that Netflix confronts is not going to get any easier. Disney, without question, is growing at a much faster pace than Netflix now and with more subscribers now. Moreover, in light of the wide-spreading cost-of-living crisis, the competition to win viewers' time and wallet will become more and more challenging for Netflix.
Netflix share price
Since the second half of 2022, Netflix's stock price has been following an ascending trajectory, rising from its multi-year bottom to currently trade around $325. If this momentum stays valid after Q4’s earnings, the price will have great potential to move towards the 38.2% Fibonacci retracement level, sits around $368. On the flip side, a pullback from its current level could bring the psychological level at $300 in prospect. Further breaking through the moving tunnel would indicate a reversal of the bullish view.
Netflix Earnings Summary
Netflix’s stock price has surged nearly 90% since the streaming giant reported its third-quarter earnings that exceeded the analysts’ expectations in a wide range. But even so, it might be too optimistic to expect that the woes are over. Either the tightened economic environment or the highly competitive industry setup will remain the major hurdle for the streaming king to overcome.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.