€154bn Netflix to justify valuation as earnings loom

By Jeran Wittenstein and Kamaron Leach

Netflix will get a chance next week to validate the $46bn (€39.4bn) added to its market value since the company’s blowout earnings report three months ago.

Netflix's Stranger Things

The main question hanging over Netflix’s second-quarter results — much like the first — is whether the company can add enough streaming subscribers to satisfy investors, whose bullish bets have made the stock the second-best performer in the S&P 500 Index this year.

Netflix silenced critics in the first quarter, adding almost 1m more subscribers than analysts projected. It is now valued at $179.75bn (€154bn).

“It’s possible expectations have gotten ahead of themselves,” Macquarie analyst Tim Nollen said in a research note ahead of the results. 

Mr Nollen said he’s not going against Netflix, even though “expectations are sky-high” heading into Monday’s report.

Growth is critical for the television- and movie-streaming company, whose success in adding subscribers has fuelled a surge in market value that now exceeds Walt Disney by almost $19bn. 

So far Netflix has proven it can keep finding new customers who are willing to pay to watch original shows like Stranger Things and 13 Reasons Why.

Wall Street is looking for second-quarter total subscriber net additions of 1.22m in the US and 5.08m internationally. 

All of this growth has come at great expense. It said last quarter that it plans to spend as much as $8bn on content in 2018.

Bloomberg


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