Winning and Losing one in between, will that continue?
Netflix, Inc. is expected to report earnings on 01/20/2022 after market close. The report will cover the fiscal Quarter ending Dec 2021. As one of the pandemic gainers, with reopenings, the company could not hold its development and twice missed the expectations in the last four earnings reports. For this quarter, Zacks Investment Research, based on 16 analysts' forecasts, expects $0.82 EPS. The reported EPS for the same quarter last year was $1.19. However, we have other analysts that expect to see the earnings per share (EPS) of $1.13 and revenue of $7.68 billion, for the fourth quarter. However, the company guidance shows the earnings per share of 80 cents and revenue of $7.71 billion. And for the annual report, the Wall Street consensus forecasts EPS is $10.50 and $296.6 billion for revenue. Q4 2020, EPS has been missed, then it could beat the estimates on the first quarter of 2021 and then missed in the second quarter and beat the third. Now we have to wait and see will the habit of winning and losing one in between will continue, or they can change it!
For the company earnings, reports, and outlook, we have to pay attention to a few points. The first one is the paid members, including the new members, which is expected to be about 550K in North America and old clients that have renewed their membership. What we need to do is compare the final results with 8.5 million paid subscribers’ estimates for the full fiscal-year 2021.
The next point that we have to pay attention to, is operation cost. In the past years, NFLX started to have its products, and now with new rules after the pandemic, high costs of producing add doubts about Netflix's net earnings growth. They may play better than the rivals, but investors pay more attention to the company's performance than its competitors. NFLX experts are expecting to see an operating margin of 20% or slightly better and to achieve this, the fourth-quarter operating margin should be approximately 6.5%, compared to 14% in the fourth quarter of 2020.
The conclusion is that the report is not expected to have a specific surprise for us, however, the outlook will be much important. We need to see with less restriction in 2022, what are their plans in the production sector? Covid restrictions ended with poor production, which could lead to the loss of some customers, therefore plans for new products will be very important for holding the marketplace.
From the technical point of view, while we are in a clear downtrend, RSI, and OBV trend line, both are flattening with a very strong resistance at 50-DMA sitting at $570. In the case of positive reports, correction from the oversold area can end in recovery, especially if the asset can recover above 50-DMA. On the flip side, the missing report can push the bears much lower towards 505.17 (2021 August low), and then 482.00.
