Netflix revenue forecast for growth despite encroaching competition
Netflix’s revenue has been forecast for growth this week, despite its share price tumbling from its record high in November.
Revenue is expected to come in at $7.7bn, according to chief market analyst at CMC Markets Michael Hewson, after the streaming giant secured $7.4bn in its third quarter.
However, profits are anticipated to be lower, as Netflix pumps more cash into its own content, following its highly popular in-house production of Korean drama Squid Game.
“As Netflix increasingly focusses on its international markets there appears little sign that revenues are slowing,” Hewson said, adding that “the scope for user growth, particularly in international markets still looks fairly decent, even when measured against 2019 subscriber growth numbers.”
Netflix will issue its financial results on Thursday and “all eyes will be firmly on subscriber growth,” technology and media analyst at PP Foresight, Paolo Pescatore told City PM
Squid-induced success
With encroaching competition from Disney+ and Amazon Prime – which recently bought up MGM’s back catalogue, management are “cautious” about Netflix’s subscriber numbers for its latest quarter, Hewson explained, after pulling in 4.4m in its third quarter.
However, the streamer continues to ‘hold its own’ on the global playing field, despite the market becoming increasingly saturated in the UK and US.
“This typically is one of Netflix’s strongest quarters. With the growth seen in the prior year due to the pandemic, it is hard to predict consumer behaviour. More so with the re-introduction of new restrictions in some markets,” added Pescatore.
“It feels like the company is retuning back to its normal cycle following the pandemic streaming party.”
New Netflix releases this quarter include The Witcher, Cobra Kai, Lost in Space and lockdown-favourite: Tiger King.
The streamer is also expected to feature a tennis docuseries which captures Novak Djokovic’s highly publicised Australian Open visa saga, according to reports.
Hewson commented: “With the addition of streaming video games on mobile devices, and the recent acquisition of the Roald Dahl Company – the potential for management to grow and diversify the business towards a younger cohort, as well as existing users can’t hurt either.”