Netflix stock has been on a relentless upward trajectory for over two years, driven by a surge in new subscriptions and a strategic foray into advertising revenue.
With the impending Q3 2024 earnings report looming, investors are eagerly anticipating whether the global streaming behemoth can sustain its growth momentum.
Although forecasts point towards record revenue and a flurry of positive revisions, the stock has recently retraced, teetering around the critical $700 support level.
Netflix’s Strategic Expansion: Diversifying Content and Monetizing Ads
In response to escalating competition in the streaming landscape, Netflix has diversified its content offerings by venturing into sports broadcasting and live events such as NFL games.
The upcoming release of the highly anticipated second season of “Squid Game” is expected to draw in a substantial viewership. However, the true narrative for investors lies in Netflix’s aggressive push into advertising.
During Q2, ad-supported subscriptions witnessed a significant 34% year-over-year increase, showcasing the company’s adeptness at tapping into a new revenue stream.
The imminent phasing out of the $6.99 plan is set to drive subscribers towards the $15.99 ad-supported tier, ramping up profit margins.
Investor Sentiment: Promising Growth Prospects?
Market analysts are anticipating robust revenue and earnings growth from Netflix, as evidenced by 30 upward revisions in the lead-up to today’s report.
However, historical patterns suggest that outperforming expectations may not always translate to an immediate surge in the stock price, with past earnings beats occasionally triggering sell-offs.
Investor focus is now predominantly on the forthcoming guidance and subscriber base expansion, with projections indicating a 4.5 million rise in new users.
Technical Analysis: Charting Netflix’s Trajectory Ahead of Results
In recent days, Netflix’s stock has rebounded, testing the vital $700 support threshold. A breach beneath this level could unleash further downside pressure towards the lows witnessed in September.
Conversely, a favorable earnings report has the potential to reinvigorate the bullish trend, with $750 and $800 emerging as the subsequent targets for optimistic investors.
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Disclaimer: This article serves solely for informational purposes and does not represent a solicitation, offer, advice, or recommendation to invest. It is essential to remember that all investments involve inherent risks and evaluation from multiple perspectives, hence investment decisions and associated risks remain the responsibility of the investor.