Netflix’s Second Quarter 2024 Earnings Preview

As Netflix gears up to announce its earnings for the second quarter of 2024, the key question on investors’ minds is whether the popular streaming service can continue to attract a substantial number of new subscribers, effectively leverage its ad-supported plans, and maintain its position as the leading streaming platform. With the upcoming earnings announcement set to provide crucial insights, let’s delve into what to expect from Netflix’s latest financial performance.

Earnings Announcement Date

Netflix is scheduled to disclose its financial results for the period spanning April to June 2024 after the stock market closes on Thursday, 18 July 2024. This announcement will be closely monitored by investors and analysts alike, eager to assess the company’s progress and future outlook.

Anticipated Revenue Growth

The company is optimistic about its revenue prospects, forecasting a 16% year-over-year increase to $9.49 billion for the second quarter of 2024. However, analysts are slightly more bullish, predicting that Netflix’s Q2 revenue will be marginally higher at $9.53 billion. This anticipated growth follows a robust first quarter in 2024, where Netflix reported a revenue of $9.37 billion, marking a 15% increase from the previous year.

Earnings Projections

In terms of earnings, Netflix has set a forecast for a net income of $2.06 billion, or $4.68 per share, for the second quarter of 2024. Analysts, however, have a slightly higher expectation, estimating the earnings per share (EPS) to be $4.74. To put these figures in perspective, Netflix reported a net income of $1.48 billion, or $3.29 per share, in the second quarter of 2023. Additionally, in the first quarter of 2024, Netflix’s net income was $2.3 billion, translating to an EPS of $5.28.

Revenue Growth Outlook

Looking ahead, Netflix is confident in its potential for continued revenue growth, projecting a 21% year-over-year increase in FX-neutral revenue for the second quarter. While the company anticipates a lower number of paid net additions in Q2 compared to Q1 due to seasonal variations, it expects global average revenue per membership to rise on a year-over-year basis in Q2, on an FX-neutral basis.

Subscriber Growth and Engagement

In the first quarter of 2024, Netflix demonstrated impressive growth by adding 9.3 million net subscribers, boosting its global paid memberships by 16% year-over-year to reach 269.6 million. The average revenue per membership also saw a year-over-year increase of 1%, or 4% on an FX-neutral basis. Despite the implementation of changes like paid sharing, engagement levels remained solid, underscoring the resilience and appeal of Netflix’s content library and platform.

​NETFLIX SALES REVENUE CHART

For the second quarter of 2024, Netflix forecasts an operating income of $2.52 billion with an operating margin of 26.6%. This is a significant improvement from the $1.82 billion and 22.3% operating margin reported in Q2 2023. Comparing this to the first quarter of 2024, Netflix’s operating income was slightly higher at $2.63 billion with an operating margin of 28.1%. These figures reflect Netflix’s strong financial performance and its ability to enhance profitability year-over-year, despite slight fluctuations between quarters.

LSEG DATA & ANALYTICS ANALYST NETFLIX RECOMMENDATIONS

According to LSEG Data & Analytics, the consensus analyst rating for Netflix is ‘buy’ as of July 10, 2024. This rating comprises 11 strong buys, 18 buys, 16 hold, and 1 sell recommendation.

Netflix – Technical View

The Netflix share price, up more than 45% year-to-date, is nearing its November 2021 record high of $700.99. Given that this peak was close to the significant psychological threshold of $700, it is likely to pose a substantial resistance level.

​NETFLIX MONTHLY CHART

A rise above the all-time high of $700.99 would shift focus to the $750 region. On the daily chart, Netflix’s share price has been range-bound since late June but recently climbed to a July high of $697.49, nearing the record peak of $700.99. The uptrend from May to July, with support at $678.42, bolsters the upside. Strong support is also observed between the May high and the late June and early July lows, ranging from $633.78 to $662.30. As long as this support zone holds, the short-term uptrend remains intact.

​NETFLIX DAILY CHART

For a medium-term top to materialize, the Netflix share price would need to decline below its June low of $626.44. Should this occur, the April high at $639.00 is anticipated to provide support slightly above this critical level. This scenario implies that the share price must breach several key support zones to confirm a trend reversal.

Currently, Netflix’s share price is supported by the uptrend line from May to July, which sits at $678.42. Below this, a robust support range exists between $633.78 and $662.30, encompassing the late June and early July lows as well as the May high. As long as these support levels remain intact, the short-term uptrend is expected to persist.

However, if Netflix’s share price falls below $626.44, it would indicate a significant shift in momentum, potentially leading to a medium-term top. The immediate support at $639.00, stemming from the April high, might offer a temporary buffer. The breach of these supports would signal a weakening of the bullish trend and could prompt further downward pressure. Investors should closely monitor these key levels to gauge the market’s direction and make informed decisions accordingly.