Published -July 17th, 2023 @ 3:15 PM (GMT+2)

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Upcoming Q2 Earnings Report for Netflix
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Evercore ISI analysts recently provided insights on the imminent Q2 earnings report for Netflix (NASDAQ:NFLX), the global streaming giant. Their forecasts hint at the possibility of a temporary stock pullback post the report's release. This development has led them to suggest that investors should consider acquiring NFLX shares after the earnings report's release as opposed to beforehand.

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In the wake of the Q2 EPS report, the market is widely expected to anticipate a surge of around 4-5 million subscribers for Netflix during Q2 and a similar, if not higher, increase in Q3 (5-7MM). If the positive intra-quarter Sub trends reported by third-party tracking services are correct, then these expectations seem plausible. However, the analysts foresee these expectations potentially dampening the chances of an upside surprise while heightening the likelihood of a negative surprise.

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Bullish Long-Term Outlook Despite Recent Downgrade
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A recent "Tactical Underperform" call on Netflix stock resulted in its removal from Evercore ISI's list of Top Picks last month. Despite this, the analysts maintain a bullish long-term outlook on NFLX. They refer to their 20 by 25 Bull Case for Netflix – a prediction of $20 EPS by 2025, with a 25X P/E multiple, propelling the share price to $500 by 2024. This optimistic projection is backed by expectations of an additional 20-30MM subscriber growth from 2023 to 2025. Fundamental improvements, diminishing competition, product initiatives, and a solid financial position make NFLX an attractive prospect for long-term investors.

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Positive Revenue and Subscriber Growth Expected
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For Q2, the Evercore ISI analysts expect Netflix to report a 3.9% YoY increase in revenue, courtesy of a net gain of 2.22 million new subscribers. The Street's Q3 estimates are also viewed as "bracketable," with the survey results highlighting a positive outlook for Netflix.

However, the ongoing Hollywood strike presents a fresh challenge for Netflix. The strike, which has resulted in many Hollywood actors and writers picketing, could disrupt Netflix's production schedule. Despite this, Netflix's international production capabilities and a robust pipeline of shows might soften the blow. The company's strong position in the market has been recently bolstered by three brokerages upgrading their ratings on Netflix's stock and five increasing their price targets.
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Netflix's Innovative Strategies Yielding Returns
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Netflix has also made strides by cracking down on password sharing and offering a cheaper, ad-supported plan. Both strategies have proved successful, helping Netflix fend off competition from Disney+ and Amazon's Prime Video. This move could substantially increase individual accounts, as users who share an account outside their home will now have to pay an additional fee.

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In conclusion, despite potential short-term turbulence due to the upcoming Q2 report and the ongoing Hollywood strike, Netflix's solid market position, innovative strategies, and expected growth make it an enticing proposition for investors.

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