A sizable part of the world that plays with tech and content stocks today will be watching for Netflix’s quarterly earnings report, which will be released after the close of the market.
It will get all that attention because Netflix was NASDAQ’s high flier last year, but this year ran into some resistance, losing about 6% of its value.
It’s gone from a high of
$458 per share in early March, to about $340 this morning, but few on Wall Street seem particularly alarmed. Netflix usually gets a nice bounce from earnings calls. Expect another one after today.
Its subscriber count apparently is up another 2.25 million, and its customers seem satisfied. Netflix’s controversial peering-like deal with Comcast earlier this year gives customers a quicker, better stream, and TheStreet.com today says that deal may have bigger, positive implications for Netflix.
BTIG analyst Rich Greenfield wrote in a blog post, "We believe Netflix agreeing to a paid peering relationship with Comcast was tied to Netflix being integrated into Comcast's X1 set-top boxes later this year. Time will tell if we are right, but we simply do not believe this is as simple as Comcast won and Netflix lost."
If Netflix did get onto that platform it would be a huge advantage, obviously, though I wonder if the mere idea—well, it’s no mere idea, really—would further gum up approval of Comcast’s merger with Time Warner Cable. Analysts and major cable and content providers may think far differently, but I’m with Sen. Al Franken on that cable merger.
By and large, the paid observers of Netflix stock seem to be pretty happy. Time.com reasonably gushed about the way things are going, quoting from a survey by RBC Capital Markets that concludes Netflix has surpassed YouTube to be the leading online video site, based on a pretty constant survey of over 1,000 Internet users.
In that tabulation, 44% now say they use Netflix to watch movies or TV shows, compared to 43% for YouTube. What’s more impressive is that Netflix only had 37% of that crowd last year, a nice bump for the streaming site seemingly built on a “House of Cards.”
On the down side, investor Nitin Gulati, writing for SeekingAlpha.com, concludes: “My fair value estimate for Netflix is $128 per share, 62% lower than the current market price…For a stock that is overvalued and has historically moved strongly after the earnings, options market is understating the upside movement risk of NFLX.”
A little higher up in the assessment of Netflix, Gulati writes: “The company currently faces strong headwinds as it competes with conglomerates such as Comcast, Verizon and the content owners for content licensing.”
One bit of serendipity is that the Netflix earnings report arrives just as Experian Marketing Services has released a study that makes a pretty interesting link between Netflix and Amazon that begins to show what you might suspect: Subscribers to streaming services are more likely to cut the cable cord. (This cord-cutting stuff is the slowest-moving “nascent trend” I’ve ever seen, by the way.)
In it new report Experian says 18% of households with Netflix or Hulu, and also equipped with high-speed broadband service, were not cable subscribers, up from 13% in 2010. Experian says 6.5% of U.S. homes outfitted with broadband have chucked their cable box, up 2 percentage points from 2010. The ability to stream onto the big TV set in family room seems to be an important selling tool “seems to be the tipping point,” the authors write. With a possible assist from “House of Cards.”