It's A Make Or Break Earnings Season For Netflix

Netflix will report its fourth quarter results this Tuesday January 21 after U.S. markets close. Investors are anxiously awaiting the results to see what impact, if any, the launch of competing Disney+ and Apple+ streaming services have had on Netflix’s business and subscriber growth.

The stock has already seen extreme volatility in 2019 due to the launch of competing streaming services, first falling more than 30% from July to September after missing subscriber expectations, and then rallying almost 30% higher in the past three months as investors decided that consumers could easily subscribe to multiple streaming services.

Ahead of this earnings release Netflix released data on international subscriber growth and revenues going back to 2017, and the data was very encouraging, showing double and even triple digit growth rates for international subscribers. Considering the penetration already by Netflix in North America, the international growth is quite promising.

In fact, Netflix has been focusing increasingly on its foreign subscribers. It has been emphasizing releasing content in local languages, and the strategy seems to be paying off.

Localized international content could be the big growth area of the next decade for Netflix, and with over 600 million households in Latin America, Asia Pacific, and the Middle East/Africa regions Netflix might be right to be blasé regarding competition from Disney, Apple and others.

The fourth quarter has expectations of $0.51 a share in earnings, and just 7.6 million new subscribers. These are fairly small numbers for Netflix to meet, and that means an earnings and subscriber beat could be waiting to power Netflix shares higher.