Netflix reports Q309 earnings after the close today. The company is holding a conference call at 6 PM EST, which can be listened to here.
The Bottom Line: Like most tech stocks, the NFLX shares are up significantly since the end of August (about 20%) so investors and analysts are expecting a pretty strong quarter from the company.
Management guided to between 10.9 million and 11.1 million subscribers at the end of the quarter and most analysts expect the company to achieve the high end of those #s. We also believe the company will likely report revenue and EPS that meets street consensus expectations (listed below), which are at the high end of the company’s guidance.
The company’s Q4 guidance looks for revenue between $431 to $445 million and EPS between $0.36 and $0.44. We believe the company will likely maintain that guidance, but street expectations are on the high end so any backpedaling from previous guidance will likely hurt the stock.
Key Consensus estimates:
- Revenue $420 million.
- EPS $0.45
- Subscribers at end of period: 11 million.
The NFLX shares are trading at about 25 times 2009 EPS — a multiple in-line with some big tech stocks like Google that generate tons of cash. We think this is a fairly expensive price but expect near-term growth to support it. Long-term we’re concerned with increased competition driven by increased emphasis on digital distribution of rental movies and streaming.
Here is a snapshot from Citi’s Mark Mahaney: