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Netflix earnings, retail sales — What to know in markets Wednesday

Heidi Chung

Netflix earnings and September retail sales data will take centerstage Wednesday.

As the competition runs hot in the streaming space, Netflix will face its moment of truth Wednesday evening when it reports third-quarter financial results.

The streaming giant’s Q3 results come after last quarter’s report revealed Netflix’s first quarterly domestic paid subscribers loss in 8 years. Netflix reported a loss of 126,000 paid subscribers during its second quarter. Netflix CEO Reed Hastings blamed the weaker content slate for the company’s weaker-than-expected subscriber adds during its second quarter. Releases of Netflix’s smash hit series, Stranger Things 3, during the third quarter is anticipated to have boosted paid subscribers for the company. Analysts expect Netflix to report 794,000 domestic paid subscribers and 5.92 million international paid subscribers during the third quarter.

The fourth quarter is gearing up to be a big challenge for reigning streaming giant Netflix. Competitors Disney+ and Apple TV+ are slated to launch in the fall at lower price points than Netflix. Investors will be paying close attention to any additional commentary from management on the growing competitive landscape ahead.

Wall Street is estimating that Netflix will report third-quarter adjusted earning of $1.23 per share on $5.25 billion in revenue. The options market is implying a 11% move in either direction following the results.

Stranger Things logo seen on the backdrop of Netflix's "Stranger Things 3" premiere at Santa Monica high school Barnum Hall on June 28, 2019 in Santa Monica, California. (Photo by Chris Delmas / AFP) (Photo credit should read CHRIS DELMAS/AFP/Getty Images)

Meanwhile on the economic data front, September’s retail sales data will provide investors with a pulse on the U.S. consumer.

Consumer spending represents about two-thirds of U.S. economic output, and if data positively surprises investors, it could put recession fears to ease. “At a time when most economic discussions have been dominated by recession risks, the U.S. consumer is one facet that has continued to perform,” Wells Fargo wrote in a note Friday. “Consumer confidence measures remain elevated but have moderated recently, while concern over the impact of tariffs has been spontaneously mentioned by consumers in recent surveys.”

Economists polled by Bloomberg expect retail sales to have jumped 0.3% in September, down from a 0.4% increase in August. Excluding volatile auto and gas sales, retail sales are also expected to have risen 0.3% for the month.

Other notable earnings reports scheduled for Wednesday include Ally Financial (ALLY), Bank of America (BAC), Bank of New York Mellon Corporation (BK), PNC Financial Services Group (PNC), U.S. Bancorp (USB), Abbott Laboratories (ABT) before market open; IBM (IBM), Netflix (NFLX), CSX Corporation (CSX) after market close.

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Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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