Netflix has a real problem ahead of its Q3 earnings report: find out more

Netflix Inc. (NASDAQ: NFLX) is confronting significant challenges ahead of its third-quarter earnings report, scheduled for October 17, according to Matt Belloni, a founding partner at the digital media company Puck.

The streaming giant’s strategy of bypassing theatrical releases is becoming a substantial obstacle, as many top filmmakers still prefer their movies to be shown in theaters.

Belloni highlighted the adaptation of Wuthering Heights, starring Margot Robbie, as a case in point.

Despite Netflix’s willingness to pay up to $150 million for the film adaptation of Emily Brontë’s 1847 novel, filmmakers have yet to decide whether to prioritize online streaming over traditional theater releases.

NFL could boost subscriber growth for Netflix

In a potential boost for Netflix, the company plans to stream NFL games on its platform this Christmas.

According to Belloni, this move into live events could help the entertainment giant reduce subscriber churn and attract new viewers.

“There’s a cadre of people that’ll follow the NFL wherever it goes, and they may not currently be subscribed to Netflix,” he explained during a CNBC interview.

Belloni anticipates that investors will closely monitor subscriber growth and engagement metrics in the upcoming earnings report, asserting that the NFL’s presence could positively impact both areas, as discussed on Squawk Box.

Analysts expect Netflix to report $9.77 billion in revenue for the third quarter, marking a 14.3% increase, along with earnings per share of $5.07, representing a 35.9% rise.

The streaming service has exceeded earnings estimates in three of the last four quarters.

Analyst predicts Netflix stock could reach $795

On Monday, Macquarie analyst Tim Nollen maintained an “outperform” rating on Netflix, predicting that the stock could climb to $795 over the next twelve months.

His price target suggests approximately a 12% upside from its current levels. Nollen recommends investing in NFLX due to its strong pricing power and ongoing monetization efforts in advertising.

He noted, “Ad tech integrations and the construction of an in-house data stack and audience graph should yield substantial advertising growth over the next two years, if not sooner,” in a research note to clients.

The last price increase for Netflix occurred in January 2022, leading analysts to speculate that the company may soon announce another hike, which could act as a significant catalyst for its stock price.

Nollen also expects the commitment to live events to enhance Netflix’s outlook soon.

However, it is important to note that Netflix shares may not appeal to income investors, as the company currently does not pay dividends.

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