If you’re a Netflix (NASDAQ: NFLX) investor — like me — it’s OK to be excited and nervous. You have every right to be excited. The stock is beating the market with its 27% gain this year, more than doubling if we stretch the starting line to the beginning of last year.
You should also be nervous because it reports its first-quarter results shortly after Thursday’s market close. Expectations are high, and with great upticks come great responsibilities. Netflix will need another strong financial update if it wants to build on its stellar gains over the past 15 months.
Leave the world behind
Momentum is on the side of the bulls. Netflix stock hit another 52-week high this month, something that it has now done for six consecutive months. But this isn’t an all-time high for the premium digital video pioneer. Netflix is still 12% away from taking out the all-time peak it scored in late 2021. With the stock’s tendency to move sharply higher or lower after fresh financials, it could be there by the end of this week if things go right.
The problem with the bubbly upbeat scenario is that Netflix itself offered up rosy guidance when it announced its fourth-quarter numbers back in January. Netflix was targeting $9.24 billion in revenue for the first three months of this year. The 13.2% year-over-year increase would be its biggest top-line jump in more than two years.
This is a better story at the other end of the income statement. Netflix is starting to cash in on the fruits of scalability. It’s at the point now where the platform was able to start cracking down on password sharing without shifting into reverse on subscriber growth. The 260.3 million accounts it was serving worldwide by the end of 2023 is a 13% increase, its largest quarterly jump in nearly three years.
Good luck canceling Netflix. You’ll find yourself on the outside of coworker and friend conversations about the widely watched shows and films on the service. Folks aren’t flinching at price increases and the password sharing restrictions at Netflix, and that’s padding its profitability.
Its guidance calls for…
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