April 18, 2022
When Netflix announces first-quarter (ended March 31) fiscal results after the market close April 19, much of Wall Street will be focused on the streamer’s current Q2 guidance rather than Q1 results. New analysis from investment firm Bank of America finds the company finds that while subscriber growth remains important, guidance is slightly more important.
In a note to clients, analyst Nat Schindler contends Q2 guidance will be driven by the fourth season launch of “Stranger Things,” as well as subscriber response to the second season of “Bridgerton.”
“We are, however, somewhat concerned that the street is expecting too much from these in the seasonally weak Q2 [period] with estimates of 2.6 million new subs being higher than 1Q guidance — something that hasn’t happened in Netflix’s history,” Schindler wrote.
Wall Street analysts project Netflix will earn $2.92 per share on $7.95 billion in revenue.
Schindler said he remains unclear why Netflix guided “so weak” in its Q1 guidance, adding that he isn’t sure the SVOD pioneer can “return to its pre-Covid growth trajectory or not and will be listening for commentary on changes in seasonality.”
Third party app data from Sensor Tower suggests that Netflix app downloads have cooled (down 6% from Q4) as Covid-related restrictions have lifted globally.
At the same time, Schindler believes global subscriber trial traffic fell 1.88% in Q1, while pricing increased 3.93% in the quarter, and up 6% year-over-year.
“We believe that Netflix will continue to see long term durable growth despite short term tough comps and increasing competition,” Schindler wrote.