Netflix's earnings report is imminent: After doubling its stock price, it faces a test, subscription numbers will not be disclosed, and advertising business becomes the new focus

According to Zhitong Finance APP, as Netflix (NFLX.US) stock price approaches its highest valuation level since 2022, the upcoming second-quarter earnings report and future outlook of this streaming giant are attracting significant market attention. The company is scheduled to announce its second-quarter performance after the U.S. stock market closes on Thursday, with the market generally expecting it to continue its growth momentum. According to aggregated analyst forecasts, Wall Street expects Netflix's earnings per share for the third quarter to reach $6.70, with revenue of $11.3 billion, representing year-on-year growth of 24% and 15%, respectively.

It is noteworthy that the company will no longer disclose the traditional core metric of quarterly subscription user numbers starting this fiscal year, instead guiding investors to focus on revenue and profit performance.

Rosenblatt Securities analyst Barton Crockett emphasized that if the company does not raise its previously set annual revenue forecast of $43.5 billion to $44.5 billion, it may trigger disappointment in the market. He also pointed out that although Netflix does not view YouTube as a competitor for its content talent, signs of shifting consumer preferences across generations are increasingly evident, and the leadership position of the U.S. streaming market may face challenges from Google's (GOOGL.US) platform.

Over the past year, the company's stock price has doubled, with a market capitalization increase of approximately $250 billion, and the current price-to-earnings ratio stands at 43 times, significantly higher than the Nasdaq 100 index's average of 27 times. Analysts generally agree that the significant upward pressure on the stock price comes from the strong content reserves of "Stranger Things," "Wednesday," and Adam Sandler's "Happy Gilmore 2."

However, the Seaport research team has downgraded its rating from "Buy" to "Neutral" this month, believing that the current stock price has fully absorbed long-term expectations such as the expansion of advertising business and market share growth, and that time is needed to verify actual results. Options market data indicates that the stock price is expected to fluctuate by about 6.5% on the day following the earnings report, lower than the average of 9.3% over the past three years, showing that market expectations are becoming cautious.

Daniel Morgan, senior portfolio manager at Synovus Trust Company, pointed out: "Netflix's current stock price fully reflects optimistic expectations, leaving limited room for error. The market generally bets on a strong performance in the second half of the year." In recent years, facing the challenge of stagnant user growth post-pandemic, Netflix has sought breakthroughs through diversified business models, currently establishing multiple growth engines such as advertising sales, subscription fee increases, live sports events, and concerts Nevertheless, the optimistic sentiment before the new film's release still dominates. The team of Jessica Reif Ehrlich, an analyst at Bank of America Securities, believes that Netflix, with its "unparalleled scale advantage in the streaming space, user growth potential, significant opportunities in advertising and live sports, and continuously improving profitability and free cash flow," remains in a favorable competitive position.

Bloomberg data shows that more than two-thirds of analysts give a "buy" rating, expecting revenue growth to maintain in the range of 14% to 16% over the next three quarters. Kenneth Leon, head of CFRA Research, specifically pointed out that compared to other tech giants, Netflix's business is not affected by tariff fluctuations or Chinese factors, "putting it in a strategically advantageous position."