Netflix has told analysts to expect only around 4.5 million global paid customer additions in the fourth quarter, its slowest Q4 subscriber growth since 2014, when the streaming service was only available in around 50 countries.
And entering its fourth-quarter earnings report Thursday, equity analysts are also expecting Netflix to discuss a painfully slow rollout of its ad-supported tier, as well as what could be a challenging birth for new password-sharing fees.
Revenue growth, too, is expected to slow to 2014 levels.
But with Netflix's Nasdaq share prices up 12% over the previous month, investors are bullish, nonetheless.
Sure, adoption so far for Netflix's $6.99-a-month partially ad-supported tier will be "slow to kick in," wrote Jefferies analyst Andrew Uerkwitz in a note to investors, "but when it does [combined with password-sharing changes], it should drive top-line outperformance."
Uerkwitz upgraded Netflix from "hold" to "buy."
Likewise, Oppenheimer analyst Jason Helfstein last week reiterated his outperform rating on Netflix stock, raising his price target to $400 from $365.
"Besides subscriber metrics, [Netflix] stock will likely react to comments surrounding progress of ad tier and new initiatives to reduce password sharing," Helfstein wrote.
Of course, as Netflix's Q1 report showed us all back in April of last year, things can go decidedly the other way if equity analysts don't like what they hear. Happily for Netflix, it's coming off two redemptive quarters, during which the pledge to sell ads and crack down on password sharers has, along with rekindled sub growth, re-inspired Wall Street.
At around $321 a share, the stock is only slightly below the $340 area in which it stood entering that "Black Tuesday" earnings report last April. We'll see where it is on Friday morning, after the company updates investors in its key initiatives. ■
