By Netflix Inc (NASDAQ: NFLX) is scheduled to report its financial results for the fourth quarter in after-hours on January 21st.
Experts are convinced it will beat expectations on back-to-back live events in Q4.
More than 108 million global viewers tuned in to watch the much-anticipated Jake Paul versus Mike Tyson boxing match on Netflix in November.
The two NFL games also attracted about 30 million viewers on average (each) in the fourth quarter.
Ahead of the earnings release, Netflix shares are trading some 7.0% below their all-time high as macro uncertainties continue to weigh on mega-cap stocks.
Netflix Q4 earnings preview
Netflix is expected to add 9.18 million new subscribers and report $10.11 billion in revenue on $4.18 a share of adjusted earnings for the fourth quarter on Tuesday.
All of those numbers suggest significant year-on-year growth, with the EPS figure even translating to a near 100% increase.
Netflix shares have been able to command a premium multiple on the back of highly-rated content, original films and series, and buzz-worthy special events.
A positive update on that front could result in a meaningful increase in the streamer’s stock price following the release.
Additionally, optimism surrounding the high-margin ads business could also help NFLX stock rally in the coming days.
Sports and live events may justify NFLX’s valuation
Note that Netflix Inc. has a history of rallying on the back of a strong financial release. Its share price jumped significantly after two of the last three earnings days.
Investors should know that expectations indeed are very high for NFLX heading in the Q4 report on January 21st. But as per BI analyst Geetha Ranganathan, live sports programming and an ever-strong content library make up for a “perfect setup” for the mass media giant.
Ranganathan expects sports, including the recently added WWE Raw and live events to “shape the future of Netflix” and “drive subscriber momentum in a big way.”
Netflix stock does not, however, pay a dividend at the time of writing.
Is Netflix stock priced to perfection ahead of Q4 earnings?
While many see Netflix as the winner of streaming wars, the company’s latest biannual report indicates no increase in engagement levels on a year-over-year basis.
That could stand in the way of a potential price hike that NFLX so desperately needs to offset headwinds related to a strong US dollar. Otherwise, it may have to downwardly revise its revenue outlook for 2025.
And considering the premium valuation, a minor setback could trigger a rather aggressive response in Netflix shares following its Q4 earnings release.
Therefore, investors should remember that it’s never the best time to invest in Netflix stock, or any other stock for that matter just hours before its earnings report.
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