Netflix Inc (NASDAQ:NFLX) has been one of the best growth stocks over the past few years and has rewarded its investors handsomely. Despite the emergence of competition in the video streaming space, Netflix has managed to remain the biggest player.
Key Metrics to Watch
On Tuesday, the company is all set to announce its financial results for the first quarter, and it goes without saying that it is going to be closely watched. The coronavirus induced lockdowns have forced people to stay at home and raised expectations regarding its performance. The stock has, in fact, rallied by around 40% since the middle of March. Here is a look at some of the things that are to be expected from the Netflix earnings announcement tomorrow.
In the fourth quarter, the company’s revenues soared by as much as 30.6% year on year, and much of that was fuelled by a 20% rise in subscribers as well as a 12% rise in average revenue per user. The rise in revenues is expected to decline in the first quarter due to the projected decline in both average revenues per user and moderate subscriber growth.
According to the company, the revenues are expected to hit $5.73 billion and record year on year growth of 26.8%. That being said, the forced stay-at-home order has raised expectations among investors for Netflix to beat its own projections.
The other important factor that investors are going to watch closely is the company’s performance with regards to subscriber growth. In Q1 2019, Netflix had added as many as 9.6 million new subscribers, and it had managed to surpass analysts’ expectations at the time.
Hence, it remains to be seen if the lockdowns have a major effect on the company’s subscriber growth. In addition to that, market watchers will also follow the company’s projections for the second quarter. It remains to be seen if Netflix chooses to go for a conservative outlook in these uncertain times.