What to expect from Netflix earnings?

The streaming giant Netflix will announce financial results for the second quarter after the close of today's session. Reports for the last two quarters were disappointing and led to a cascade sell-off, which was preceded by massive drops in indices. Netflix, which enjoyed popularity and gains during the pandemic, has lost nearly 65% ​​of its value since the beginning of the year. Will history repeat itself again and Netflix's poor performance lead to another wave of sell-offs? Or maybe Netflix will surprise and the bulls' appetite will increase?

Estimates according to the Bloomberg consensus:

Expected revenue: $ 8.05 billion vs. $ 7.87 billion in Q1 2022

Expected earnings per share (EPS): $ 2.99 vs. $ 3.53 in Q1 2022

Subscriptions:  2 million loss  vs 200,000 loss in Q1 2022

• According to the company's predictions from Q1 2022, the loss of 2 million subscribers would bethe worst quarter in history for Netflix. If analysts are positively surprised by the report, the company's growth may dynamically accelerate and contribute to an overall improvement in sentiment. At the same time, Netflix's plans for the coming quarters will be important. Although a rebound in the face of a positive report may cause short-term increases, a possible recession may weigh on the company's operations. Markets fear that demand will fall as inflation and rising interest rates stifle consumption and force people to cut spending in a recessionary environment.
• Morgan Stanley analysts alerted on Monday about a possible crisis on the streaming platform market, lowering forecasts, among others for Paramount Global and Fox Corporation. The bank pointed to lower consumer and advertiser spending caused by recession fears.
• In the past, the company was the undivided leader on the narrow market of streaming platforms, but now Netflix is ​​struggling with growing competition (including Paramount, Disney, Amazon), which severely limits the number of new consumers. In addition, the coronavirus pandemic forced people to spend time at home, which had a positive impact on the company's revenues. On the other hand, Wall Street still expects that the introduction of advertising will have a positive impact on the company's revenues;
• The new season of the popular series 'Stranger things' released this quarter may boost the company's performance and limit the churn of subscribers. Netflix plans further strategic premieres in the second half of this year. The company intends to increase profitability by introducing fees for sharing passwords and enable advertising on the platform by creating an offer of paid and free accounts. Additionally, it is working on the implementation of franchise models based on intellectual property;
• Markets panicked after news of subscriber losses last quarter and stock price plunged 36% in one session. Netflix signaled that the decline was indirectly related to the war in Ukraine and the withdrawal from Russia, but this announcement did not calm the market sentiment.
• The company acquired over 36 million subscribers in the record-breaking 2020 and 2021 years. Some of them are likely to stay with Netflix, and the company's ability to attract subscriptions over the long term still looks promising;
• Netflix is ​​not the backbone of the US economy, but it can be seen as a kind of barometer of consumer sentiment. The huge drops in the company's share price after the publication of the results for Q1 2022 mean that investors will be very attentive to today's report.

Netflix (NFLX.US), interval W1. Netflix's stock has been consolidating for over 2 months. From the technical point of view, nearest major support lies at $ 160.00 which is marked with previous price reactions. If today’s quarterly results will surprise on the upside, then an upward impulse towards resistance at $ 230.00 could be launched. Source: xStation5