Netflix (NFLX) is gearing up to report its third-quarter earnings on Tuesday, October 21. Based on options pricing, traders are expecting a 7.42% move in either direction following the release of results. Interestingly, the potential swing is much higher than the streaming giant’s long-term average post-earnings move of 4.2%. This suggests that investors are bracing for a more volatile post-earnings reaction.
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At the Q3 earnings call, investors are likely to closely watch net additions, especially in international markets, and updates on engagement and revenue from the ad-supported plan.
Expectations From NFLX’s Q3 Results
Netflix has had a relatively quiet quarter, with shares down about 2% over the past three months. However, analysts expect the company to deliver a solid quarter.
Wall Street is expecting NFLX to report earnings of $6.96 per share, up 28.9% from the same period last year. Also, analysts project revenues of $11.51 billion, up from $9.78 billion in the year-ago quarter.
NFLX is benefiting from the shift in focus from pure subscriber growth to monetization and profitability. Also, the successful implementation of paid-sharing has driven major growth in paying members. Further, its advertising business is growing, aiding bottom-line expansion.
Finally, the company continues to expand its global footprint and content pipeline to ensure long-term engagement.
Is NFLX Stock a Good Buy?
Turning to Wall Street, NFLX stock has a Moderate Buy consensus rating based on 18 Buys, seven Holds, and one Sell assigned in the last three months. At $1,381.26, the average Netflix stock price target implies a 10.93% upside potential.
