Netflix, Inc. (NASDAQ:NFLX) has been one of the surprise outperformers so far in 2013. The streaming service has posted two quarters of excellent earnings well ahead of the expectations of Wall Street. The company may be set to do it again this quarter, but there are worries.
The streaming service has almost certainly expanded since its last earnings report but at the company’s current size, growth is slowing. Most people in the United States who have the income and infrastructure for Netflix, and demand a service like it, are already connected. Growth is bound to slow domestically, and international problems continue to plague the company.
Since the start of the year Netflix, Inc. (NASDAQ:NFLX) has increased in value by 185%. That means that shareholder’s assets in the company are worth almost triple what they were at the start of the year. Coming up to an earnings report is a really difficult time, particularly for those who bought into the company as a growth stock.
Those who bought Netflix, Inc. (NASDAQ:NFLX) because they believe the company has what it takes to be a media force in the coming years will not be frazzled by the coming earnings report. Those looking to make a quick turnaround on the stock are nervous because poor performance might mean losing a big investment. Now may be the worst possible time to get out of Netflix, Inc. (NASDAQ:NFLX) stock, however.
The above is a chart of Netflix stock price since January 1. Up until the company announced each of its last two earnings reports there was very little of the positive built into the firm’s price because there was a general feeling that the company was overvalued. Earnings announcements in January and April saw the price shoot vertically, an unusual enough phenomenon that it should be noted.
Netflix Earnings May Shake Investors
Earnings may be the best possible time to play Netflix, Inc. (NASDAQ:NFLX). But two occurrences do not make a pattern, and the price Netflix is trading at right now certainly does make it look overvalued. Netflix shares really are risky heading into earnings. Lack of support may see the price fall a long way before it steadies should the firm disappoint.
Netflix, Inc. (NASDAQ:NFLX) is set to report its earnings for the second quarter of 2013 on July 24. At the very least, the fallout should the stock falter will be interesting.