Netflix is scheduled to release its next earnings report on Wednesday after closing bell, and on average, analysts are expecting to see revenue of $1.751 billion, adjusted earnings of 10 cents per share, EBITDA of $133.9 million and GAAP earnings of 8 cents per share. Netflix management guided for GAAP earnings of 7 cents per share.

Netflix Earnings Preview: Polarizing Views

Netflix may keep surprising on subscribers

One area Wall Street has been extremely happy about is Netflix’s subscribership growth. The company recently announced that it has raised the price for its base plan $1 to $9.99 per month, which triggered at least one price target increase. Most analysts agree that this demonstrates pricing power, and most are expecting the video streaming company to surprise to the positive or at least post strong subscriber growth in the third quarter.

Cantor Fitzgerald analyst Youssef Squali and his team are expecting Netflix to report 1.17 million domestic net streaming adds, compared to last year’s third quarter adds of about 975,000. Management guided for at least 1.15 million adds during the quarter. That would bring the company’s total domestic subscribership to 43.47 million.

Netflix’s international adds driven by expansion

They’re also estimating 2.55 million international net adds for the third quarter, compared to last year’s 2.04 million international adds during the third quarter. That would bring Netflix’s international subscribership to 25.8 million. Management guided for at least 2.4 million international subscriber additions during the quarter.

The company has been rapidly expanding into new markets, with these new markets driving continued subscriber growth. Netflix added Japan in September, Australia and New Zealand in March, France, Germany, and Benelux in September 2014, and the Netherlands in late 2013.

Management has indicated that they will continue expanding rapidly into more and more countries over the next year or two. Netflix’s services became available in Italy, Portugal, and Spain this month.

Netflix price hike suggests confidence

The Cantor Fitzgerald team suggested, as others have as well, that Netflix’s price increase in the U.S., Canada, parts of Latin America, France, Germany, and Benelux suggest that demand for its services remains strong in these countries. The company upped its North American and Latin American price by $1 per month and its European price in those three countries by €1. The increase affects only new subscribers and will not hit previous subscribers until later.

The analysts say the price hikes also indicates that management has confidence in the value of the service and content provided by the company and also how comfortable management is with raising prices. Despite the price increases, Netflix is still less expensive than HBO at $14.99 per month and Hulu Plus at $11.99 per month.

The Cantor Fitzgerald team expects the price increases to add between $55 million and $60 million in revenue and 13 cents per share in earnings in fiscal 2016. That assumes 100% incremental margin and a stable churn rate. They maintained their Buy rating and $125 per share price target going into Wednesday’s earnings report.

For the fourth quarter, their estimates are in line with consensus at revenue of $1.858 billion, a 25.1% year over year increase, EBITDA of $109.7 million, adjusted earnings of 8 cents per share, and GAAP earnings of 4 cents per share.

Netflix may be funding originals, expansion

Raymond James analyst Justin Patterson and his team suggest that Netflix’s price increase could signal not only pricing power but also an increase in spending on original content. He also suggests that the higher price could fund the company’s international expansion. Patterson and team have an Outperform rating and $140 per share price target on Netflix.

On the opposite end of the spectrum from Raymond James and Cantor Fitzgerald is Wedbush analyst Michael Pachter. He and his team have an Underperform rating and $40 per share price target on the streaming video provider. Pachter expects Netflix to exceed management’s “modest guidance,” but he’s extremely bearish on the company.

Pricing power or something else?

In fact, he doesn’t think the company’s price increase suggests pricing power at all but rather continued increases in content costs. This is something most bears have been concerned about for years. Pachter suggests that most, if not all of the incremental revenue earned from the price increase will be “absorbed by spending,” noting that this is Netflix’s second price increase in 18 months. He also thinks the company will increase its price again sometime within the next two years.

In spite of his bearish view on the company, he doesn’t think the current $1 increase will result in “significant” attrition. However, he also doesn’t think it will be enough to “take Netflix to the high level of future profitability that its valuation implies.”

Competition concerns for Netflix

Also like most bears. The Wedbush analyst remains concerned about increasing competition, not only from Amazon and Hulu but also from Apple, which is rumored to be working on a streaming video or TV service. Further, Amazon plans to remove the listings for Apple TV, Google’s Chromecast, and Asus’ Nexus Player at the end of this month. The point is to ensure that the streaming media services it sells “interact well with Prime Video,” which Pachter thinks is “clearly an effort to hurt Netflix long-term.”

Further, Amazon now has another exclusive deal with CBS, and Hulu is now offering a commercial-free option and has signed a multi-year deal with EPIX, essentially stealing that deal from Netflix.

As of this writing, shares of Netflix were up 0.11% at $113.45 per share during regular trading hours.