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Netflix share price: what to expect from Q4 2021 results


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Netflix's Q4 2021 results should see strong subscriber growth while the group hosts a record content offering, although margins are likely to be impacted by increased cost.

BG_netflix_redNL.jpgSource: Bloomberg
 Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Friday 14 January 2022 

Netflix Q4 earnings preview

 

When is Netflix's earnings date? Netflix Inc., the Nasdaq-listed, world-leading internet television network will report its fourth quarter earnings for 2021 (Q4 2021) on Tuesday the 20th of January 2022.

What does ‘The Street’ expect?

Netflix is expecting Q4 2021 to be the group's strongest quarter in terms of its content offering. However, this will see elevated expenses negatively impact margins.

Guidance from the previous quarter’s results has suggested the following for Q4 2021:

- Revenue $7.71 billion (+16.1% y/y)

- Net income $365 million (-32.6% y/y)

- Operating margin 6.5%

- Earnings per share (EPS) of $0.80 (full year $10.71)

A consensus of estimates from Refinitiv arrives at the following expectations for the Q4 2021 Netflix results:

- Revenue $7.71bn (+16.1% y/y)

- Net income $371.73 (-31.44% y/y)

- EPS of $0.83 (full year $10.74)

Expectations are for 8.5 million net additions to the group's paid streaming services. This would bring the total global streaming paid membership to around 222.06 million subscribers.

How to trade the Netflix results

A Refinitiv poll of 44 analysts maintains a long-term average rating of buy for Netflix (as of the 13th of January 2021), with 13 of these analysts recommending a strong buy, 18 recommending a buy, 10 hold, two sell and one with a strong sell recommendation on the stock.

Netflix%20broker%20ratings%2014%20Jan.pnSource: Refinitiv Workspace

 

 

Ninety percent of IG clients with open positions on Netflix (as of the 13th of January 2021) expect the share price to rise in the near term, while ten percent of IG clients with open positions on the company expect the price to fall.

Netflix%20client%20sentiment%2014%20Jan.Source: IG charts
Netflix%20chart%2014%20Jan.pngSource: ProRealTime

 

 

A sharp correction from all-time highs sees the share price of Netflix now trading below our long-term trendline. The move below trendline support suggests the long-term uptrend is broken, but does not yet confirm a long-term downtrend is in place. Only on a break below key support at 469.20 would we consider a new long-term downtrend.

In turn, we currently asses the longer term price trend for Netflix to be sideways. Traders looking for long entry might prefer to see a bullish price reversal and close back above the red trendline and horizontal resistance at 578.65 for confirmation that the longer term uptrend is resuming. Failure to do so instead suggests further downside with 469.20 the next support target considered. Should this scenario occur, range traders might look for a bullish price reversal closer to the 469.20 support level for long entry, using the reversal low as a stop-loss consideration for the trade.

In summary

- Netflix will report its Q4 2021 earnings on the 20th of January 2022

- Revenue of $7.71bn (+16.1% y/y) is expected for the reporting period

- A record content offering is expected to see expenses elevated and margins impacted

- EPS of between $0.80 and $0.83 are expected for the reporting period

- 8.5m net paid subscriber additions globally are expected in the fourth quarter

- The average broker rating for Netflix is ‘Buy’

- The majority of IG clients with open positions on Netflix expect the rice to rise in the near term

- The long term price trend for Netflix is currently considered sideways following a sharp retracement from all-time highs and a break of trendline support

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