Netflix Q4 Earnings Coming Up: Time to Buy, Sell or Hold the Stock?

Earnings and Revenue Projections - Netflix forecasts Q4 2024 revenues to increase 15% year over year, reaching $10.12 billion, in line with consensus estimates [1] - The company anticipates earnings of$ 4.23 per share, slightly above the Zacks Consensus Estimate of $4.19 per share, which has declined by 0.5% over the past 30 days [2] - Netflix's Q4 results are expected to benefit from its diversified content portfolio, including localized and foreign-language productions [3] Earnings Estimate Trends - Current Q4 2024 earnings estimate is$ 4.19 per share, down from $4.21 per share 30 days ago [4] - Next quarter (Q1 2025) earnings estimate is$ 5.96 per share, down from $6.07 per share 30 days ago [4] - Full-year 2024 earnings estimate is$ 19.76 per share, unchanged over the past 90 days [4] Earnings Surprise History - Netflix delivered a 6.09% earnings surprise in the last reported quarter [6] - The company has beaten earnings estimates in three of the trailing four quarters, with an average negative surprise of 5.73% in the missed quarter [6] Content and Subscriber Growth - Netflix expects higher sequential paid net additions in Q4 due to seasonality and strong content slate [8] - Key Q4 releases include Squid Game S2, Outer Banks S4, Love is Blind S7, and new dramas like Black Doves [9] - Latin American premieres include 100 Years of Solitude and Senna, two of the region's biggest shows [9] - Unscripted offerings include Aaron Rodgers: Enigma and Rhythm + Flow S2 [10] - Film releases include Carry-On, The Six Triple Eight, and Spellbound [10] Operational Performance - Netflix projects Q4 operating margin of 22%, a 5 percentage point improvement year over year [10] - The company's gaming portfolio, including Grand Theft Auto: The Trilogy, is enhancing user engagement and attracting new subscribers [11] Regional Revenue Estimates - Asia-Pacific Q4 revenues estimated at $1.15 billion, up 20.4% year over year [13] - Latin America Q4 revenues estimated at$ 1.23 billion, up 7% quarter over quarter [13] - EMEA Q4 revenues estimated at $3.21 billion, up 15.5% year over year [14] - US and Canada Q4 revenues estimated at$ 4.49 billion, up 14.2% year over year [14] Market Performance and Valuation - Netflix shares have surged 76.8% in the past year, outperforming the Zacks Consumer Discretionary sector (13.4%) and peers like Apple (21.9%), Amazon (47.2%), and Disney (16.1%) [15] - The company is trading at 36.31X forward 12-month earnings, above its five-year median of 33.82X and the industry average of 26.32X [18] Competitive Landscape - Netflix faces intense competition from Disney+, HBO Max, Peacock, Paramount+, Apple TV+, and Amazon Prime Video [12] - The company also competes with traditional linear TV, YouTube, TikTok, and the gaming industry for consumer attention [12]