What’s in Store for Netflix, Inc. Stock Beyond Q4 Earnings?
Netflix, Inc. (NASDAQ:NFLX) is up 64% in the past 12 months, and it is up nearly 20% in just the past month. Of its FANG compatriots — Facebook Inc (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOGL) — NFLX stock has started 2018 the strongest.
However, fourth-quarter earnings are set for next week and after a strapping Q3 earnings report, Netflix has guided less optimistically. The question is, whether it did so because it doesn’t think it can keep up the torrid pace it has set in the international marketplace or because it played the quarter conservatively hoping to reap the benefits of outperforming its own conservative guidance.
Given NFLX stock’s track record, the latter seems more likely than the former, although its growth will eventually have to slow down — there are only so many people in the world that it can sign up. But that day is not nearly upon us. There are many years of organic growth left in NFLX, as long as acquisition costs don’t get too high.
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Bottom line: NFLX stock remains a strong long-term growth story.
Netflix’s Impressive Moat
By market cap, the only entertainment company — not companies with entertainment divisions like Amazon and Alphabet — that comes close to Netflix’s size at this point is Time Warner Inc (NYSE: TWX). And Netflix is almost a third larger at this point.
Simply put, Netflix is not only a major entertainment company, it has built a very impressive moat around its business. None of the other streaming services match the unique environment that Netflix has built.
The reason for its dominance? Netflix is focused on its entertainment business, whereas Amazon and Google have a lot of other irons in the fire. They aren’t out to dominate one sector as much as be influential, profitable players across a variety of markets.
Because of its focus, it’s a lot easier to see how Netflix will continue to power its growth.
Continued Growth For Netflix And The Bottom Line For NFLX Stock
In the US, Netflix is raising prices for its subscription service, which will be certainly be a nice revenue boost.
Abroad, the streaming service continues to add subscribers faster than most analysts can keep up with. In Q3, analysts expected 4.4 million new subscribers. Netflix brought in 5.3 million. That came with 54% international revenue growth, year over year.
Guidance for Q4 is to add another 6.3 million subscribers.
Q3 revenue came in at $2.9 billion, and for Q4 the company is expecting to bring in $3.2.
With an expanding global economy, continued growth abroad will likely accelerate in coming quarters, and there’s plenty of headroom for NFLX stock.
Eventually competitors will start to eat into its business and growth will slow. But that conversation has nothing to do with the current version of NFLX stock today.
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