Netflix Earnings: Forecasting Ahead of Q1 Earnings Report

Netflix Earnings: Forecasting Ahead of Q1 Earnings Report

  • Excellent performance in the last quarter of 2015 influencing 2016 first quarter
  • Growing subscriber base
  • Will price increase impact subscription numbers?
  • Algorithmic forecast
  • I Know First is currently bullish on NFLX

Netflix Earnings

Netflix, Inc. (NFLX) has proven itself as a force in the technology sector for years, with no outstanding competitor in online streaming of movies and tv shows. Our predictive algorithm repeatedly gives NFLX strong bullish signals and time and time again, the algorithm is proven right as Netflix stock has continued to rise. The company will be releasing its first quarter earnings report for 2016 soon and the algorithm is predicting a further increase in share prices ahead of the announcement.

Netflix outperformed analyst expectations in the fourth quarter of 2015 with adjusted earnings coming in at 7 cents per share, down from 10 cents a share for the same time the year before, but beating the 2 cents per share estimate. Revenue was reported at $1.82 billion, compared to the previous $1.49 billion, which just barely missed estimates of $1.83 billion for the quarter.

The most impressive numbers from the Q4 earnings report were those concerning the subscription growth that the company saw. There were 5.59 million total net subscribers added to the service during the quarter, an increase from the 4.33 million that were added in the same quarter in 2014. International subscribers accounted to 4.04 million of those subscriptions added, beating by far the estimates for 3.51 million. In the same quarter of 2014, close to half the number of subscriptions, 2.43 million, were added.

In early January, Netflix announced that it had expanded its service to be available in more than 190 countries. The company is still working on expanding into China, which is one of the last major countries where the video streaming service is unavailable. The company is prepared to dedicate the time necessary to make expansion into China possible and is realistic about how long it will take to complete such a task.

Despite a coming price increase for U.S. subscribers to $10 a month, most analysts don’t foresee drastic changes to the number of the service’s subscription numbers. With content prices going up, Netflix is under pressure to increase prices in order to maintain revenue, but the original content available through the streaming service will be a driving force behind its ability to hold on to users.

I Know First uses an advanced state of the art algorithm based on artificial intelligence and machine learning to foresee market performance for more than 3,000 markets including stock forecasts, world indices, commodities, interest rates, ETFs, and currencies.   The algorithm generates a forecast with a signal and a predictability indicator. The signal is the number at the center of the box. The predictability is the figure at the bottom of the box. At the top, a particular asset is identified. This format is standardized across all forecasts. The middle number indicates strength and direction, not a price target or percentage gain/loss. The bottom figure, the predictability, signifies a confidence level.

With Netflix planning to release its first quarter earnings in a week, the predictive algorithm is outputting bullish signals for the company on the short, mid and long-term time horizons. As you can see below, the signals for the 14 Days, 1 month, 3 month, and year-long time horizons are 19.91, 36.92, 83.12, and 347.25 with predictabilities of 0.2, 0.25, 0.31, and 0.33. With longer time horizons, the algorithm gives the stock strong bullish signals.

Netflix Earnings

In the past, I Know First has correctly predicted both bullish and bearish movements of NFLX stock thanks to their advanced algorithm. This forecast from November 21st, 2014 correctly predicted the one-year bullish trend they had when the company ultimately brought investors a return of 135.48%. The forecast had predicted a bullish signal of 1804.71 and predictability of 0.55 as seen below in the forecast.

Netflix Earnings