Netflix has a lot to prove this week – The Fool Motley

One of the first market players to release quarterly results this season of results will be Netflix (NASDAQ: NFLX)and the stakes are high. The operator of the premier premium streaming video platform will present its first quarter financial results soon after the market closes on Tuesday.

Netflix has been among the top performers in the market for six years, but a lot is happening these days. Netflix decided to increase its prices during the quarter, just as one of its closest rivals lowered its rates. Along the way, you have not one but two major challengers flaunting their offers later this year. With competition becoming more and more hungry, Netflix can not afford to show any signs of weakness in Tuesday afternoon's report.

At the height of expectations

Netflix set the bar high by setting its forecast for the first quarter three months ago, at least on the subscriber side, where it expects to close its period with 148.16 million streaming subscribers worldwide, a net increase of 25% over the previous year and 8.9 million more than at the beginning of the year.

Netflix has offered cautious advice in the past with few exceptions, but a lot has happened in the first three months of the year. Disneyof (NYSE: DIS) Hulu, which now holds a majority stake, announced that it was lowering prices for its most popular plan offering limited ads just days after Netflix began providing advice to its subscribers. Hulu was already bridging the gap with domestic subscribers, gaining 8 million net new users in 2018, while Netflix had only registered 5.7 million streaming accounts in the domestic market. With Netflix increasing the price of its most popular plan from $ 2 to $ 12.99 a month, while Hulu was going in the opposite direction with its price reduction of $ 2 to reach $ 5.99 a month, it n & # # Has never been so crucial that Netflix is ​​meeting its expectations.

We also saw Netflix reveal in February that we would not be offering any more seasons from the last two shows she was still working on with Disney's Marvel. The media giant is withdrawing its content available on Netflix before the launch of Disney + in November, but this decision has disappointed fans of The punisher and Jessica Jones. The news could have had a negative impact on subscriber retention for the quarter.

The revenue forecast for Netflix will be easier to erase. Netflix forecast revenue of $ 4.494 billion for the first quarter in mid-January. Revenue growth of 21% over the previous year would be the lowest since mid-2013. The price increase announced by Netflix in January – but which will be applied later to existing members – should help accelerate revenues in the coming quarters. In short, the advice that Netflix offers Tuesday could be more important than the first quarter financial data.

Analysts will also want to know what CEO Reed Hastings is thinking about Disney's new service. Disney's shares hit an all-time high on Friday as Netflix shares fell 4.5% after Disney's unveiling. Hastings had already talked about the competition in the past, but his voice could change now that the market is attracting more and more interest for Disney +, just as Hulu is gaining in its rearview mirror in its domestic market. The Netflix share is essentially back to its level just before the announcement of its fourth quarter results. This is a rare case of parade in place for Netflix in the last three months and, one way or another, the action will be a big driver Wednesday.