Netflix earnings likely to be overshadowed by 'all important' Q2 guidance, BofA says
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Netflix (NASDAQ:NFLX) is scheduled to report first-quarter earnings after the market closes on Tuesday and while the results are important, investment firm Bank of America is placing more importance on guidance.
Analyst Nat Schindler, who rates Netflix buy with a $605 target, noted that the second-quarter guidance will be driven by the return of Stranger Things, as well as a lingering impact from the second season of Bridgerton.
"We are, however, somewhat concerned that the Street is expecting too much from these in the seasonally weak [second-quarter] with Street estimates of 2.6 [million] being higher than 1Q guidance âsomething that hasnât happened in Netflixâs history," Schindler wrote in a note to clients.
Netflix (NFLX) shares were down fractionally to $340.81 in premarket trading on Monday.
A consensus of Wall Street analysts expects Netflix to earn $2.92 per share on $7.95 billion in revenue.
Schindler added that it's unclear why Netflix's (NFLX) first-quarter guidance was "so weak," and as such, it's unclear if the streaming giant "can return to its pre-Covid growth trajectory or not and will be listening for commentary on changes in seasonality." 
The analyst cited data checks as showing that downloads of Netflix's (NFLX) app and daily active users have come "under pressure" as Covid-related restrictions are eased around the world.
Sensor Tower previously reported that mobile app downloads were flat year-over-year, but down 6% from the fourth-quarter of 2021 to the first-quarter of 2022.
Schindler also cited churn data from SimilarWeb as Netflix (NFLX) raised prices in the first-quarter in the U.S. and Canada, which raised cancellation traffic 0.5% in the quarter compared to the previous quarter.
However, the analyst noted that while worldwide trial traffic fell 1.88% in the quarter compared to the previous quarter, pricing traffic was up 3.93% in the same time frame and up 6% year-over-year. 
"We believe that Netflix will continue to see long term durable growth despite short term tough comps and increasing competition," Schindler wrote ahead of Netflix (NFLX) earnings.
Last week, Morgan Stanley trimmed its estimates and price target on Netflix (NFLX) due to a series of factors such as some near-term risk to subscriber expectations.