Netflix (NASDAQ:NFLX) is scheduled to report its fourth-quarter 2022 results on January 19, after the market closes. The streaming giant’s quarterly performance is likely to be impacted by declining subscribers, lower demand for advertising, elevated expenses, and strong competition in the streaming space.
The Street expects Netflix to post earnings of $0.58 per share in Q4, significantly lower than $1.33 in the prior-year period. Meanwhile, revenue expectations are pegged at $7.8 billion, representing a year-over-year jump of 1.3%.
Factors Impacting Netflix in Q4
Netflix’s subscriber base is unlikely to show considerable growth in the quarter as high inflation continued to impact consumers’ discretionary spending. Nevertheless, the affordable ad-supported tier launched mid-quarter and the company’s efforts to improve content might have shown support to some extent.
The company forecasts 4.5 million subscriber additions in Q4, down from the 8.3 million added in the same quarter last year.
Furthermore, Netflix’s bottom line might have been impacted by the strong U.S. dollar during the quarter as 60% of the company’s revenues come from overseas.
Wedbush Analyst Remains Optimistic About Netflix
Ahead of Netflix’s Q4 earnings release, Wedbush analyst Michael Pachter raised NFLX stock’s price target to $400 from $325, while maintaining a Buy rating on the stock.
The analyst is of the opinion that Netflix remains well-positioned in the competitive streaming industry. Also, Pachter believes that Netflix will be able to limit subscriber churn with the launch of its new ad-tiered subscription plans.
Is Netflix Still a Good Stock?
Though the company’s subscriber growth might have slowed, Netflix remains a prominent name in the streaming space. Meanwhile, Wall Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. This is based on 15 Buy, 14 Hold, and three Sell recommendations.
The average NFLX stock price target of $316.26 implies 3.1% downside potential from the current level. Shares of the company are up 35.4% in the past three months.
