Should I buy Netflix shares after Q4 results?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Jan 20, 2022
  • Netflix will announce Q4 results this Thursday
  • The consensus EPS estimate stands at $0.82
  • Bank of America sees upside potential

Netflix,Inc. (NASDAQ: NFLX) will announce fourth-quarter earnings results this Thursday, January 20, after the market closes.

Netflix shares have weakened more than 14% since the beginning of the 2022 year, and the current price stands at $519.

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Bank of America sees upside potential

Netflix will announce fourth-quarter earnings results this Thursday; the consensus earnings per share estimate stands at $0.82 (-31.1% Y/Y), while the consensus revenue estimate is $7.71 billion (+16.0% Y/Y).

It is important to mention that over the last twelve months, Netflix has beaten revenue estimates every quarter; still, the company has beaten earnings per share estimate only one time.

Netflix met subscribers’ expectations in the third quarter, and the company added a net of 4.38 million global streaming subscribers, which is much better than its own guidance of 1.54 million subscribers.

Bank of America, Loop Capital Markets, and Wedbush Securities have been largely positive about Netflix reaching its projected subscriber numbers, and according to estimates, Netflix’s massive content lineup in 2022 could drive subscriber growth.

Netflix projected 8.5 million net subscribers add for the fourth quarter, and the company raised its subscription prices across the board last week. Michael Pachter, an analyst at Wedbush Securities, said:

Netflix holds a nearly insurmountable competitive advantage over rivals, and most of the future subscriber growth will come from lesser developed regions at lower monthly subscription price points.

On the other side, J.P Morgan and research company Stifel warned about slower subscriber growth and cut their price targets on Netflix shares.

J.P. Morgan analyst Doug Anmuth said he expects Netflix to report only 6.25 million new subscribers in the fourth quarter, and he lowered the price target on the company’s stock to $725 a share from $750.

J.P. Morgan’s price target still implies more than 30% upside on Netflix shares compared with the current price, and if the company posts strong fourth-quarter earnings results, the share price could be above the current levels.

$530 represents the first resistance

Netflix shares have weakened more than 14% since the beginning of the 2022 year, but if the company posts strong fourth-quarter earnings results, the share price could be above the current levels.

Data source: tradingview.com

If the price jumps above $530, it will signal to buy Netflix shares, and the next target could be $550.

On the other side, if the price falls below $500 support, it would be a “sell” signal, and we have the open way to $450.

Summary

Netflix is scheduled to announce fourth-quarter earnings results this Thursday, January 20, after the market closes. Netflix shares have weakened more than 14% since the beginning of the 2022 year, but if the company posts strong fourth-quarter earnings results, the share price could be above the current levels.

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