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Netflix earnings — What to know in markets Wednesday

Heidi Chung

The first “FANG” name — Netflix (NFLX) — will deliver its second-quarter financial results after the market close Wednesday.

After dominating the streaming space for years, the company now faces growing competition. As new players enter the game, investors have been hyper focused on how Netflix will ultimately fare in the evolving media landscape. While competition may be a worry among investors, some analysts on Wall Street think such concerns are overblown. “We think these fears are overdone, and we like the setup for NFLX shares going into 2H19, driven in part by a great content slate,” Cowen analyst John Blackledge wrote in a note on July 9.

Nevertheless, in April, Netflix warned investors of weaker new subscriber growth. The company projected 5 million new subscribers from April to June, and 4.7 million of those subscribers are expected to have come from international markets. Subscriber growth remains a concern as growth rates are expected to decline in a competitive environment.

Original content and a shrinking library will also be focal points for Netflix going forward. As the company continues to write hefty checks for a new slate of films and shows, Netflix has been losing popular shows such as “Friends” and “The Office,” which are expected to leave Netflix in 2020 and 2021, respectively. Maintaining a robust library will be a challenge that investors will pay attention to in the second half of the year and beyond.

Analysts polled by Bloomberg are expecting Netflix to report adjusted earnings of 77 cents per share on $4.93 billion of revenue. Typically following second-quarter earnings, Netflix stock has seen a 5.9% drop the next day, according to Bespoke Investment Group. The options market is currently implying an 8% one-day move in either direction on the announcement.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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