The company’s shares are down 25% since July.
Earnings season kicks off this week, and Wall Street has been waiting with bated breath to see what Netflix will report. The company releases its third-quarter earnings on Oct. 15, and many analysts are anticipating more bad news for the streaming giant.
Goldman Sachs expects Netflix to fall short on its third-quarter guidance, and USB expects the company’s international growth to continue to slow. Both analysts lowered their price targets for the company but maintained a buy rating.
Shares of Netflix are down 25% since July when the company reported its second-quarter earnings. The earnings report showed the company lost 126,000 U.S. subscribers during the second quarter.
This is bad news for a company that depends on a growing subscriber base for its revenue, so it’s safe to say that Netflix needs to share some good news this week. Here are three things to watch during the company’s third-quarter earnings report.
1. Subscriber growth
During this latest earnings report, investors will be looking for signs that the company’s subscriber base is rebounding. Fortunately, Netflix has a history of coming back strong after a sluggish quarter.
Based on the company’s guidance, subscriber growth should be up during the third quarter. Company management estimated that it would reach seven million new subscribers during the third quarter. This is due to the release of Stranger Things and other original content.
2. International growth
Investors will also be looking to see that the company’s international momentum is continuing. This is an important metric for Netflix because this can give it a leg up on its streaming competitors.
During quarter two, the company’s international growth slowed significantly. During the third quarter, management expects its international subscribers to grow by 6.2 million, which would represent significant growth.
3. The competitive landscape
And finally, Netflix will need to show investors that it has a plan for how it will handle increased competition in the streaming market. Both Apple and Disney will launch their services during the fourth quarter, so investors will be looking for the company to speak to how this could impact its growth.
The final two earnings report of 2019 will be crucial for Netflix. The company needs to show investors that its growth story is far from over and that it can continue to dominate the streaming market.