For Netflix, it's wait and see with its subscriber numbers on tap
Netflix (NASDAQ:NFLX) is scheduled to report its second-quarter results after Tuesday's market close, and there remains a cloud hanging over the streaming TV leader that is darker than at any time in more than a decade.
For Netflix (NFLX), it's all going to come down to how many subscribers it lost in the past three months. The company has already said it expects to report 2 million net subscriber losses for the quarter--or 10 times the 200,000 net losses it had during the first quarter of the year.
And if you don't remember what happened three months ago, Netflix (NFLX) shares plunged by 35% in a single day after the company gave its last disappointing subscriber report.
At least for now, Netflix (NFLX) has already set expectations so low that it's possible that investors might not seek such retribution against the company as they did in April. Wedbush Securities, analyst Michael Pachter said that he thinks the company will actually report fewer subscriber losses than anticipated. For his part, Pachter expects Netflix (NFLX) to say it lost 1.5 million subscribers during its second quarter, in part due to "the staggered release date for Stranger Things 4, which has very strong viewership."
Pachter said that it remains possible that Netflix (NFLX) will issue downbeat subscriber forecast for its third quarter. However, Pachter said that by continuing to staggering new, and big-name content releases over several weeks, Netflix (NFLX) could "see an uptick in net new subscribers" that would help to restore investor confidence in the company's shares.
Investors will also likely be interested in any new information that Netflix (NFLX) has to say about its plans for a membership option that costs less than its current plans and is supported by advertising. Last week, Netflix (NFLX) said it had lined up Microsoft (MSFT) to be its advertising technology sales partner.
Nat Schindler, of Bank of America Securities, said last week that Netflix (NFLX) is "running up that hill" with regards to its expected performance and outlook, and raised concerns that the company could end up becoming too reliant upon signature hits like Stranger Things
to help it build up its subscriber numbers.