Netflix stock price forecast ahead of earnings amid $900 million ‘Squid Game’ windfall

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 18, 2021
  • Netflix shares on Monday edged slightly lower despite reports it made $900 million from ‘Squid Game’.
  • The TV show was the most popular series last month, ranking first in several countries including the US.
  • Squid Game reportedly created $891 million in impact value whilst costing just $21.4 million in total.

On Monday, Netflix Inc. (NASDAQ:NFLX) shares edged slightly lower despite reports the company could receive a $900 million windfall from ‘Squid Game’. The video streaming giant measures the success of its shows by impact value, calculated based on how new and existing customers view the show, whilst assessing the cost impact and long-term viewership.

Squid Game reportedly had an impact value of $891 million, achieved at a cost of just $21.4 million for the entire show, implying an efficiency ratio of 41.7. The show ranks number one in several countries including the US, with more than 132 million people reported to have watched the last two minutes of the final episode in just 23 days.

Should you buy NFXL ahead of earnings?

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From an investment perspective, Netflix shares trade at steep trailing 12-month and forward P/E ratios of 66.46 and 48.75, respectively. Therefore, value investors could opt for alternatives in the market.

However, analysts expect the company’s earnings to grow significantly in the company quarters, starting with its fiscal Q3 EPS. As a result, NFLX earnings per share are forecasted to rise by nearly 53% this year, before increasing at an average annual rate of more than 43% over the next five years. 

Therefore, it could be a compelling option for growth investors.

Source – TradingView

Technically, Netflix seems to be trading within an ascending channel formation in the intraday chart. As a result, the stock has surged closer to the overbought conditions of the 14-day RSI. 

Therefore, investors could target potential pullback profits at about $607.06, or higher at $584.65. However, given Netflix’s exciting growth prospects, the stock could still rise to retest $645.72.

Time to bet on growth?

Technically, although Netflix shares are up more than 23% since the 12th of August, the stock still offers exciting growth prospects, offering a long-term opportunity.

Therefore, with the company reporting its fiscal Q3 results on Tuesday, it could be time to buy the stock.

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