Investors eye subscriber growth in Netflix quarter

The online video-streaming company is expected to show a strong increase in new members, driven by its original programming.

By MSN Money Partner Jul 21, 2014 12:03PM
File photo of Netflix envelopes (© Paul Sakuma/AP)By Rex Crum, MarketWatch

Netflix (NFLX) will report its second-quarter results on Monday after the ball. Analysts expect the online video-streaming company to show strong growth in new subscribers, driven by its offering of popular original programs like "House of Cards."

Earnings: Analysts surveyed by FactSet estimate Netflix will earn $1.14 a share compared with 49 cents a share during the same period a year ago. Netflix itself had forecast a profit of $1.12 a share for the quarter.

Revenue: Analysts expect Netflix to report second-quarter sales of $1.34 billion, with $1.14 billion coming from video-streaming sales and the remainder from DVD rentals. Netflix has forecast streaming revenue of $1.14 billion for the quarter.

Stock performance: For the year, Netflix shares have risen almost 20 percent, to trade recently at around $440. However, the stock is down 7.5 percent since reaching a 52-week-high of $475.87 on July 2.

Subscriber growth: Netflix has forecast adding 1.46 million new video-streaming customers during the quarter, which would give it 49.8 million total streaming subscribers. In May, the company said it would raise the price of its streaming service for new customers by $1 to $8.99 a month. Subscribers at the time of the price increase were grandfathered in at $7.99 a month for two years.

Raymond James analyst Aaron Kessler recently reiterated his outperform rating on Netflix's stock and lifted his price target to $500 a share from $450, saying that growth in international markets "significantly expands [the company's] opportunity." 

During the quarter, Netflix said it would expand its service into six more European countries this year, including France and Germany, and Kessler estimates that those new markets contain 62 million broadband households and should "significantly expand Netflix's European presence."

Netflix may also give an update on the viewer reaction to its latest seasons of "Orange Is The New Black" and "Derek," which debuted during the quarter. Those shows, along with "House Of Cards" and other original programs, have garnered Netflix 31 Emmy Award nominations.

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Tags: NFLX
Jul 22, 2014 10:11AM
Netflix is slowly killing its DVD by mail service; DVD's are mysteriously getting "lost" in the Netflix system and what used to be 2 day turnaround is now 3-5 days. Meanwhile, its streaming service offers much less content than the mail service and less than some competitors. This is a stock that is definitely NOT worth $500/share, more like $50.
Jul 22, 2014 10:07AM
I'm going to Blockbuster to rent a VHS video and Atari cartridge.
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