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Netflix Monster First Quarter Earnings Preview- A Complete Breakdown
Netflix will be the headliner this week when it comes to earnings. As I mentioned in the write-up last week, Google trends have been showing strong international interest. Cities like Mumbai and New Delhi are seeing significant search interest, while city-state Singapore is also up there over the past year.
It is a trend that has continued over the past quarter as well.
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Options
Options are pricing in a massive amount of volatility after results. Look at the implied volatility term structure, with a reading near 90! Huge!
The long staddle option strategy is pricing in a rise or fall of nearly 10 percent for the $312.50 strike price, set to expire on April 20. Again a huge move. Keep in the S&P 500 has implied volatility term structure that is less than 14 percent! Netflix is nearly 90%.
Analyst Estimates
Analysts estimates are calling for earnings to climb by nearly 57 percent to $0.63 per share, while revenue is expected to jump by 40 percent to $3.69 billion. But the most critical metric’s will be those subscriber growth number and the outlook for net additions in the second quarter.
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Subscriber Growth
The company is guiding for 6.35 million net additions in the quarter, bringing the total subscribers to roughly 124 million. But I think it may take a much more significant beat to move the stock higher. According to my projections, the company should report result roughly in-line with expectations.
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Technical Breakout
The technical chart suggests shares could see a significant rise though, with a breakout occurring on Friday, and that could lead shares much higher, perhaps to new records post results.
So all that is left now is for the company to report those results.
Michael Kramer and Clients of Mott capital own shares of NFLX
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.
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Tags: #netflix #earnings
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.