Netflix is set to announce its Q3 2024 earnings on October 17th, with analysts expecting quarterly revenue of $9.77 billion, net income of $2.23 billion, and earnings per share of $5.16. These numbers are significantly higher than Q2, and analysts are anticipating a strong quarter for Netflix, with expected growth rates of 38.4% YoY for EPS, 14.4% YoY for revenue, and over 33% higher net income on an annual basis. This growth is expected to solidify Netflix’s position as the top global streaming service, outperforming competitors like Disney+ and Paramount.
From a content perspective, Netflix has had a successful year with hits like Bridgerton, Baby Reindeer, and Nobody Wants This. The streaming giant has a strong content schedule for 2025, including the Christmas schedule of the NFL, WWE Raw, Season 2 of Squid Game, and the new season of Stranger Things. With these major releases, Netflix may have the opportunity to raise prices from next year, as it has not done so in recent years and has introduced changes to boost revenue.
Investing heavily in new content and features, Netflix could potentially justify a price increase from its current standard plan price of just over $15 per month for US users. A 12% increase to $17 per month could be feasible at this stage, especially considering that subscriber growth remained strong during the crackdown on password sharing. A Netflix subscription is considered a necessity for many, making a price increase potentially less controversial for subscribers.
Subscriber numbers for Netflix have been on the rise, with 8.05 million new subscribers in Q2, bringing the total to 277.65 million worldwide. However, the company plans to stop reporting subscriber numbers from 2025, shifting the focus to revenue growth instead. The stock price hit a record high of $733.40 in October, with a P/E ratio of 46.41 and a forward P/E ratio of 34.9, indicating expectations of strong earnings growth in the future.
Analysts are generally bullish on Netflix, with a majority recommending a ‘buy’. While the stock has already outperformed the average target price of $721, there is a risk of disappointment if Netflix fails to meet expectations for Q3 earnings. Overall, the company has a high chance of meeting expectations, but a negative surprise could impact the share price. Investors will be eagerly awaiting Netflix’s earnings report to see how the streaming giant performs in Q3.
