Yahoo Finance entertainment reporter Allie Canal previews what to expect from Netflix’s fourth-quarter earnings results and also details the success of the ‘Avatar’ sequel.
Video Transcript
DAVE BRIGGS: Shares of Netflix took a beating in ’22, but bounced back to start this year, up almost 10%. The streaming giant releases its Q4 earnings after the bell tomorrow. Yahoo Finance’s Allie Canal here with the preview. What are we expecting, my friend?
ALLIE CANAL: Yeah, Dave. I mean, this is going to be an important quarter for Netflix to really set the tone for 2023. If we think about this point last year, we started 2022 with two straight quarters of subscriber declines. So Netflix is going to want to come into this with a position of strength. And investors, they’re going to want a bit of an update on some of those profitability efforts, such as the recently launched ad-supported tier, along with those crackdowns on password sharing.
However, analysts have warned us that it’s really the long-term game that you want to watch here. You’re not going to see those efforts really reflected this quarter, a large part of that being that ad tier launched in November right in the middle of the quarter, only 12 markets. So we’re going to have to wait and really see what the executives give us on that earnings call following the announcement.
But in terms of the numbers, here’s what we’re looking at when it comes to consensus estimates on the Street. Revenue expected to come in at 7.85 billion, adjusted EPS at $0.58 a share, and then subscriber net additions at 4.5 million. Now we do have a weakening US dollar. We know the strength of the dollar has been a really big pain point for Netflix. So that weakening could potentially impact revenue, as well as operating income figures.
And then in terms of subscribers, we had solid record breaking content in the fourth quarter– “Wednesday,” “Glass Onion,” and “Dahmer.” The list goes on. And we’re going to see continued content improvements planned for the current quarter. So although subscriber numbers, they’re not as important to investors anymore, the focus has really been on revenue, free cash flow, and profitability.
A subscriber beat would still be a win here. And as you mentioned about the stock price, I mean, 10% up on the year, 60% over the past six months. So, so far, so good. And we’ll see what happens tomorrow.
SEANA SMITH: Yeah, we certainly have seen a number of analysts come out in support of Netflix over the last couple of months. A lot of them very bullish on this new ad plan. So we’ll see what we get from the company tomorrow. Allie, there’s another big story we want to get to. “Avatar, The Way of Water” crossing another huge milestone here. Tell us about it.
ALLIE CANAL: Nearing 2 billion in global ticket sales, this is the number that James Cameron said this film would have to reach if it wanted to even get close to profitability. So you know he’s championing that. But just to put this number into context, how hard this is to accomplish, only five films in history have ever crossed that 2 billion threshold. That was the OG “Avatar,” “Avengers, Endgame,” “Titanic,” “Star Wars, The Force Awakens,” and “Avengers, Infinity War.”
So this film has really done incredibly well at the box office, very well internationally, especially since it has not been shown in Russia. And it’s outpacing projections in China. And China, by the way– Disney very happy about this– greenlighting two Marvel sequels with “Black Panther” and “Ant-Man.” So, overall, I think Disney is very happy with its box office slate right now.
DAVE BRIGGS: No doubt. Did you guys see it yet, “The Way of the Water”?
SEANA SMITH: I haven’t, no.
DAVE BRIGGS: Come on!
ALLIE CANAL: I was invited, and then I couldn’t go because, again, it’s four hours.
DAVE BRIGGS: Listen.
ALLIE CANAL: I know, I know.
DAVE BRIGGS: Explain–
ALLIE CANAL: You’re gonna yell at me.
SEANA SMITH: It’s the one movie that it’s worth going to the theater for.
DAVE BRIGGS: You have to see it in the theater.
SEANA SMITH: I’ll give you that.
DAVE BRIGGS: It’s fantastic.
SEANA SMITH: All right, we’ll see.
DAVE BRIGGS: All right.
SEANA SMITH: All right, Allie Canal, thanks so–
