Netflix subscriber addition, ad-tier growth in focus during Q3 results

Netflix (NASDAQ:NFLX) is set to report third quarter results on Thursday, and investors will keep an eye on subscribers’ trend and the performance of the streaming giant’s cheaper advertising tier.

Wall Street expects the California-based company to post EPS of $5.13, while revenue is expected to rise 14.3% to $9.76 billion during the quarter.

Netflix likely added 5.5 million net subscribers globally during the third quarter, versus consensus of 4.5 million, according to Wedbush. The streaming pioneer added 8.8 million subscribers a year earlier, which included the first full quarter impact of paid sharing.

The company plans to stop reporting subscribers number starting in the first quarter of 2025.

Despite the decelerating subscribers’ numbers, analysts are still bullish on the company’s future growth, with many anticipating planned price hikes.

Citi said it sees scope for the firm to raise U.S. prices by 12% in 2025, while Oppenheimer anticipates a hike in Premium pricing for other regions after the company’s announced price hikes in the U.S., UK, and France in October.

Earlier in July, Netflix surpassed revenue growth and user growth expectations in its second-quarter earnings.

“We think Netflix is positioned to accelerate ad tier revenue contribution into year-end and 2025 as it improves its advertising solutions and targeting, utilizes new partnerships, and adds more live events,” said Wedbush analyst Alicia Reese.

Reese also thinks Netflix will ramp up its content slate over the holiday, attracting more viewers while also managing content costs.

The company’s content slate for the quarter included a brand-new season of Emily in Paris, The Perfect Couple and The Accident, among others, while the fourth quarter will see the release of the second season of the popular South Korean drama series Squid Game.

Over the last three months, EPS estimates have seen 30 upward revisions, compared to one downward revision. Revenue estimates have been revised upward 13 times versus 19 downward moves.

Seeking Alpha analysts and Wall Street are bullish and rated the stock a Buy, while Seeking Alpha’s Quant ratings consider it a Hold.

The stock gained nearly 44% so far this year, outperforming the 22% rise in the S&P500 Index.