Will Netflix earnings surprise Wall Street again? 🎢

Streaming giant Netflix (NFLX.US) will report third-quarter financial results before the US session opens. Wall Street may prove extremely sensitive to them, the company's previous weak reports foreshadowing an overall weaker earnings season and a sell-off in indices. The company intends to launch a service with in-platform ads this quarter. The stock is gaining 1.5% in the pre-market, and the positive surprise is likely to drive the market:

Expectations

Projected number of subscribers: + 1 million.

Projected revenue:  $7.84 billion (up 4.84% y/y)

Projected earnings per share (EPS): $2.13

•  Wall Street's expectations seem rather high looking at Netflix's two previous weak quarters. Particularly evident from the projected subscription growth, analysts clearly expect Netflix's Q3 to determine that the previous two were merely 'accidents at work', on the road to growth, although a number of investors including Bill Ackman claimed they had lost faith in the company's business model, after weaker reports caused the stock price to plunge. Additionally, the fourth quarter, which has already begun, may drive interest in Netflix due to the fall and winter season, during which many people spend their free time and evenings at home;
•  The company has made a number of major moves since the beginning of this year, cracking down on password sharing, among other things, and raising the price of subscriptions at the same time focusing on the mobile games and series segment. Analysts moderately agree that this quarter will erase 1 million total subscription losses from the first half of the year. Also making a powerful move is the release ahead of schedule of a cheaper plan that includes advertising:

"As the most scalable player in the industry, we expect Netflix to garner strong demand from advertisers seeking the service's reach and younger demographics" stressed analysts from Swiss UBS Equities.

• Analysts will pay particular attention to the growth and forecast further growth of Netflix subscribers. The company wants to beat out growing competition from HBO Max or Disney+, but it's unclear how users will take to the cheaper bundled option with 5 minutes of commercials, per 1 hour of screening. After all, that's why streaming channels were created in the first place, for users to avoid watching commercials. In an era of inflation, however, we can expect some households to opt for the cheaper package and sacrifice 5 minutes, for the lower package price;
• The first lower-priced subscription plan is expected to launch as early as November and cost $6.99/month; previously, Netflix indicated it would not launch until early 2023, and the company likely has significant hopes of improving margins with advertiser revenue;
• By making ads available on the platform, Netflix, as the largest streaming service, could once again 'elude the competition'. Brokerage firm Moffett&Nathanson forecasts that the streaming giant will generate $1.7 billion in net profit from advertising in the Canadian and U.S. markets, and an additional $1 billion from global operations, as early as 2025.

Netflix (NFLX.US) shares, H4 interval. The stock price is trying to reverse downward prices. Weak financial results may reverse the recent upward trend and send the SMA50 average below the SMA200 again, an intersection that technical analysis calls a 'death cross' and often heralds a permanent change in the price's downward direction. RSI indicates high levels, but still far from overbought, at 60 points. On the other hand, the upward movement after the results could keep the SMA50 above the SMA200 and the stock will continue its upward trend. The stock has lost nearly 70% since the peaks of that year and 59% since the beginning of 2022. Source: xStation5