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Netflix is slipping ahead of its earnings report

Netflix is slipping ahead of its earnings report
EntertainmentEntertainment2 min read

reed hastings

Getty Images/Ethan Miller

Netflix is set to report earnings after the bell on Monday, and the company's stock is slipping in anticipation of the report.

Netflix is trading 0.64% lower at $198.27 ahead of Monday's report.

Netflix is expected to report adjusted earnings of $0.41 per share on revenue of $2.974 billion. The company is also expected to report the number of added subscribers in the third quarter. Analysts are estimating a net add of 774,000 US streaming subscribers and 3.72 million international subscribers in the quarter, according to data from Bloomberg.

Wall Street is fairly bullish ahead of the earnings report. About 60% of investors surveyed by Bloomberg are bullish on the stock. Goldman Sachs is the most bullish on Wall Street, with a price target of $235, about 18% higher than Netflix's Monday price of $198.33.

Goldman upped its price target to $235 on Friday. The firm said it expects the stock to rise after the company releases earnings because it thinks current subscriber estimates are too low. Goldman expects 13.9 million new Netflix subscribers in the second half of the year, while the rest of Wall Street currently expects 10.8 million.

Netflix announced a price increase for its subscription services earlier this month. Some analysts said the increase will provide Netflix resources to spend more on producing original content, which is a big driver of new subscriptions for the company.

Netflix plans on spending $7 billion on original content in 2018. The company will have to spend more to fend off its growing competition in the space. Companies like Amazon, Hulu, Apple and many of the traditional studios are ramping up their original content spending to try and match pace with Netflix.

The head of Morgan Stanley's media research team told Markets Insider that Netflix's original content model is a "nice strategy" to fight off the competition. The company's vertical integration, along with the attractive licensing revenue it can offer traditional studios is enough to ensure its growth, at least for now, he said.

Netflix is up 55.42% this year and reports its third-quarter earnings after the bell on Monday.