This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
Otherwise, enjoy the column!
Subscribe to the Monster Stock Market Commentary and join the 2,476 subscribers getting it for FREE every day!
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.
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%.
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.
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.
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.
© 2018 Mott Capital Management, LLC. Use, publication or reproduction in any media prohibited without the permission of the copyright holder.
Tags: #netflix #earnings