Netflix Stock To Lap Early Covid Subscriber Gains With Q1 Report

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Internet television network Netflix (NFLX) faces tough year-over-year comparisons when it reports first-quarter results next Tuesday. That’s because the streamer got a huge boost in subscribers in the year-earlier period as people stayed home at the start of the Covid-19 pandemic. Netflix stock has been treading water ahead of its first-quarter report.




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Netflix forecast adding 6 million subscribers worldwide in the March quarter. In the first quarter of 2020, Netflix added 15.77 million new subscribers, crushing Wall Street’s estimates. Consumers turned to home entertainment in droves as they sheltered in place early in the health crisis.

Wall Street is looking for 6.3 million net new Netflix subscribers in this year’s first quarter. It sees 4.4 million in the second quarter.

Analysts expect the Los Gatos, Calif.-based company to earn $2.97 a share, up 89% year over year, on sales of $7.13 billion, up 24%, in the March quarter.

Netflix Stock Dips Ahead Of Earnings Report

On the stock market today, Netflix stock dipped 0.5% to 546.54. Netflix stock has essentially been moving sideways since last July. NFLX stock has been consolidating for the past 12 weeks with a buy point of 593.39, according to IBD MarketSmith charts.

Netflix’s subscriber goal for the first quarter is conservative, Piper Sandler analyst Thomas Champion said in a note to clients Friday.

“Despite a tough year-over-year subscriber comparable for Q1 2021, we are positive on NFLX shares,” Champion said. He kept his overweight, or buy, rating on Netflix stock with a price target of 605.

Popular Netflix original content in the first quarter included “Bridgerton,” “Cobra Kai,” “Lupin,” and “Ginny & Georgia.”

Bracing For Tough ‘Covid Comps’

The market is “bracing for the ultimate in tough ‘Covid comps’,” with Netflix’s first-quarter report, Morgan Stanley analyst Benjamin Swinburne said in a report Wednesday. He encouraged investors to look beyond Q1 results to Netflix’s long-term growth prospects and improving free cash flow.

Swinburne maintained his overweight rating on Netflix stock with a price target of 700.

How Will Netflix Do As Economy Reopens?

Netflix investors are increasingly focused on how the subscription video-on-demand service will fare as Covid vaccines become more widely distributed and the economy opens again, UBS analyst John Hodulik said in a note to clients Friday.

“While the stock may remain volatile in the near-to-medium term, we continue to view NFLX as the long-term winner within streaming media and remain constructive on the fundamentals,” he said. Hodulik reiterated his buy rating on Netflix stock with a 12-month price target of 650.

Other analysts are cautious on Netflix stock.

“We expect a main area of focus to be subscriber trends in markets where pandemic-related restrictions have eased, allowing people to engage in more activities outside the home,” Raymond James analyst Andrew Marok said in a report. He rates Netflix stock as market perform, or neutral.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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