Netflix, Inc. (NASDAQ:NFLX) will post its second-quarter 2014 financial results and business outlook on its investor relations website on Monday, July 21, 2014, at approximately 1:05 p.m. Pacific Time.
Netflix Chief Executive Officer Reed Hastings, Chief Financial Officer David Wells and Chief Content Officer Ted Sarandos will host a live video discussion about the Company's financial results and business outlook at 2:00 p.m. Pacific Time.
Wall Street anticipates that the Online Video Streamer will earn $1.15 per share for the quarter, which is $0.66 more than last year's profit of $0.49 per share. iStock expects Netflix to beat Wall Street's consensus number, the iEstimate is $1.20.
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Sales, like earnings per share (EPS), are expected to grow, jumping an impressive 24.90% year-over-year (YoY). The consensus revenue estimate for Q2 is $1.34 billion versus last year's $1.07 billion.
Netflix operates as an Internet television network, is engaged in the Internet delivery of TV shows and movies directly on TVs, computers, and mobile devices in the United States and internationally. The company operates in three segments: Domestic Streaming, International Streaming, and Domestic DVD. The company also provides DVDs-by-mail membership services. As of May 21, 2014, it had approximately 48 million customers in approximately 40 countries.
We aren't alone in expecting a good quarter. Wedbush analyst, Michael Pachter says he is "Expecting a Q2 beat as the popularity of original content should offset seasonality. Our current estimates are for revenue of $1.34 billion and EPS of $1.13, versus consensus of $1.34 billion and $1.15, and guidance of $1.12 (Netflix did not provide revenue guidance). We modeled Q2 domestic streaming sub net adds of 0.52 million, in line with guidance, but down from 0.63 million in Q2:13, reflecting the negative impact of seasonality."
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Does that even make sense, a beat but below the consensus? Who cares about company guidance, it all boils down to what Wall Street expects.
Anyway, we've had some success using Google's Search Volume Intensity (SVI) in gauging NFLX's prospects. SVI for the keyword "Netflix" dropped to an average reading of 55 in Q2 versus 65 in Q1, which is in line with Pachter's quarter to quarter projections.
However, year-over-year (YoY) searches for "Netflix" increased 5.8% in 2014 versus 2014, which means there could be some upside in net adds.
Forecasting better than expected results from Netflix is no big deal as the company posted a bullish earnings surprise for 19 of the last 20 quarterly checkups. On average, NFLX's earnings came in 47% higher than the consensus for the 19 bullish surprises.
Beating the street's outlook doesn't always mean the internet service provider's shares go up, but more often than not. Investors reacted positively to 10 of the 19 plus quarters with an average return of 22.58% in the days surrounding results.
The second quarter, however, has not been favorable for shareholders. NFLX's Q2, EPS-driven price sensitivity has a perfect track record in the last half-decade, falling five consecutive July announcements. From most recent back, Netflix slipped -5.41%, -24.59%, -3.5%, -13.98%, and -6.8% in the days before and after the last five Q2 reports.
Overall: The iEstimate, Google Trends, and Netflix, Inc. (NASDAQ:NFLX)' history suggest another bullish surprise; however, investors should beware of Q2 negative price history.
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