Netflix EPS Beat, Revenues Miss
Netflix shares are trading higher ahead of the open today despite a bumpy set of second quarter earnings yesterday. Netflix came through with an EPS of $3.20, well above the $2.95 the market was looking for. However, revenues were seen lower than forecast at $7.97 billion vs $8.026 billion expected. However, it was the news on subscriber numbers that was the big focus for this release. With Netflix having hiked its subscription costs, cracked down on account sharing and confirmed plans to introduce adverts, Wall Street was roughly looking for around a 2 million account loss in subscribers. While the company did indeed confirm further net losses in subscriptions over the quarter, it was much less than expected at 1 million accounts.
Looking ahead, the ongoing rise of competition in the streaming space, as well as the impact of the global cost of living crisis and the return to pre-pandemic living, means that the company likely faces further loss of subscribers over the coming year. Citing the positive impact of hit shows such as Stranger Things, however, Netflix still has the ability to draw crowds through the quality of its hows which means a bigger focus might go into this area going forward as a way of retaining market share.
Technical Views
Netflix
Following the heavy decline across early Q2, Netflix shares have since bottomed out, underpinned by the 160.65 level support. With both MACD and RSI turning higher, price is now testing the 203.42 level resistance, threatening to break higher. If we do move above this limit, focus will turn to 234.74 and 264.42 above.
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