Netflix Earnings Preview: Market not expecting much ahead of NFLX Q1 report

NFLX stock is down 52% since November high. is steady in Tuesday's premarket ahead of what many see as a defining earnings report scheduled after the market closes. NFLX stock has received at least 15 earnings per share downgrades from the Wall Street analyst community in the past three months amidst only one upgrade. Expectations are down due to worse than expected guidance from the company's own executives during the January earnings call.

Since its November 2021 all-time high near $701 per share, NFLX stock has lost nearly 52%. Shares are flat in Tuesday's premarket.Wall Street analysts have a consensus view of $2.92 for EPS on $7.94 billion in revenue heading into the Q1 results. This compares to $3.75 per share on $7.16 billion in revenue in the same quarter a year ago. If management reports results in line with consensus, it will mean an EPS decline of 22% and a turnover gain of 11%.

Guidance for Q2 will once again be key, but much of the focus will be on the new subscriber figure for Q1 and on revenue growth. Netflix needs to beat expectations on both levels and provide improved Q2 forecasts for NFLX stock to begin a recovery. One sore point is Russia, which contributed about 1 million subscribers to Netflix's global 220 million customer base.

A report from market research firm Kantar showed that 1.5 million streaming accounts have been abanded in Britain during the first quarter. The firm said Netflix and Amazon Prime had stickier products compared with Disney+ and Apple TV and that most households deciding to cancel their streaming plans were making the decision due to higher inflation, especially higher energy costs. In March the UK experienced its highest bout of inflation in 30 years.

A report in The Daily Mail estimates that Netflix loses out on $6.25 billion every year in revenue due to password sharing. Citibank estimates password sharing may cost the streaming industry about $25 billion a year in total. Last month, Netflix announced it will soon begin charging subscribers for shared passwords. It is rolling out a campaign to allow users to add additional profiles for $3 a month, but thus far the strategy is only in place in Costa Rica, Chile and Peru.

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