Netflix, Inc. (NASDAQ:NFLX) is all set to release its earnings report for the three months ending June 30 later today after the market closes.
According to a consensus estimate of analysts studying Netflix, Inc. (NASDAQ:NFLX), the company is expected to show earnings per share of 40 cents in today’s report on revenue of $1.1 billion. In the same three months of 2012, Netflix earned 11 cents per share on revenue of $889 million.
Netflix Arrested Development
Investors will be particularly interested in the effect of Netflix, Inc. (NASDAQ:NFLX) original shows on the company’s subscriber base. In the first quarter of this year, the firm’s House of Cards was seen as a boon to its subscriber numbers. This report will see analysts gauge the reaction to the highly anticipated release of sitcom Arrested Development.
When it comes to original programming, Netflix, Inc. (NASDAQ:NFLX) is making waves. The impact of the programming on the company’s subscriber base is difficult to measure, but the company will be able to give some kind of estimate. Original programming is not cheap to produce, but it is central to the company’s ongoing business plan. Netflix, Inc. (NASDAQ:NFLX) will need to prove to investors that the investment is worth making.
Netflix weight of expectation
Netflix, Inc. (NASDAQ:NFLX) shares are some of the highest valued on Wall Street and among big firms its P/E is almost completely unique. The firm’s stock trades at more than 60 times 2012 earnings. In order to keep shares at their current level, the company will have to continue offering up excellent earnings reports, this afternoon’s report is no exception.
Since the start of the year, shares in Netflix, Inc. (NASDAQ:NFLX) have almost tripled, growing by 185 percent. When a company grows that fast there is often little downside support on its share price. This means that if Netflix, Inc. (NASDAQ:NFLX) earnings are poor this afternoon, shares could collapse in value.
On the other hand, companies with high valuations often fail to grow in value, even if they produce results above and beyond expectations. Netflix, Inc. (NASDAQ:NFLX) managed to buck that trend back in April, with share prices spiking despite the high valuations. Investors who bought in recent days, with shares a little over 1 percent below their all time high, must be hoping for a similar spike this time around.