Netflix, Inc. (NFLX) Earnings Preview: International Loss

Netflix, Inc. (NFLX) Earnings Preview: International Loss

Netflix, Inc. (NASDAQ:NFLX) will release its third quarter earnings numbers this afternoon after the bell rings on Wall Street. The company is expected to show strong growth for the three months through September, but questions will remain about the incredibly high value the market has put on the company and its international growth model.

Netflix, Inc. (NFLX) Earnings Preview: International Loss

In the run up to the release of the earnings report, analysts studying Netflix, Inc. (NASDAQ:NFLX) were looking for earnings per share of 49 cents from the company. Revenue for the period is expected to come in at $1.1 billion. In the same three months of 2012 the company earned 13 cents per share on revenue totaling $905 million.

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Netflix international earnings

One of the most important numbers from today’s earnings report will be the amount of money that Netflix Inc (NASDAQ:NFLX) lost on its international operations in the period. Analysts are expecting losses to slow down, but the company’s costs are bound to remain high as it tries to popularize its service across the world.

A Goldman Sachs Group Inc. (NYSE:GS) report on NNetflix, Inc. (NASDAQ:NFLX) earnings estimated that the subscriber growth in international markets will come in at about 900,000 in the report. Netflix guidance puts the range of subscriber growth across the world at 600,000 to 1.3mn. The Goldman report highlights the fact that Netflix has beaten on international profitability for six straight quarters and the analysts expect that the trend will continue.

International markets are the most important part of Netflix, Inc. (NASDAQ:NFLX) right now. Without drastically increasing revenue per user, there is almost no way in which the company can meet the weight of expectations by operating in North America alone. The firm’s biggest problems in international markets have been the licensing of content, and competition from companies like Inc. (NASDAQ:AMZN).

Netflix at home

Netflix, Inc. (NASDAQ:NFLX) is still relying on the market in the United States for the majority of its growth. The company dominates the streaming market in the U.S., but saturation will come at some point, and it may be sooner than many think. The Goldman report estimates that the company added 1.5 million new subscribers to its roll in the third quarter.

The report put a price target of $315 on Netflix, Inc. (NASDAQ:NFLX). That’s a boost from the former target of $280, but it is still below the $342 shares in the firm will open at later on this morning.

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