Over the next couple of months, most publicly listed American companies will report their operating results for the quarter ended Sept. 30. Investors are trying to navigate several headwinds right now, including a higher inflation rate, interest rate hikes, and even a potential slowdown in artificial intelligence (AI) development from labs like Anthropic and OpenAI, so this earnings season comes at a critical moment.
Moreover, the S&P 500 (SNPINDEX: ^GSPC) is trading at a Shiller cyclically adjusted price-to-earnings (CAPE) ratio of 41.8, its second-highest valuation ever, behind the dot-com bubble peak in 2000, so strong corporate results might be necessary to sustain the current bull market.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Netflix (NASDAQ: NFLX) stock is currently trading 48% below its all-time high, and it’s one of the few major technology companies heading into this earnings season at a very attractive valuation. The streaming giant will report its third-quarter results on Oct. 20. Here’s why I predict they will spark a recovery in its stock.
Wall Street is souring on Netflix stock, but analysts are still collectively bullish
Netflix has over 325 million paying subscribers, making it the largest streaming platform in the world for movies and television shows. The company enjoys economies of scale, so it’s highly profitable while most of its competitors continue to lose money. This has a few advantages: Netflix can spend more on creating and licensing content and on advertising, and can afford to offer multiple subscription tiers at different price points.
But over the last few months, Wall Street analysts at major firms like Goldman Sachs, Barclays, and Wells Fargo have slashed their price targets for Netflix stock, citing concerns about declining engagement and a potentially weak content slate that could hurt revenue growth. Some of that is baked into management’s most recent forecast, which suggests the company’s revenue is on track to grow by just 13% to $51.2 billion in 2026 (at the midpoint of the guidance range).
However, Netflix’s most promising growth engine is still in its infancy. In late 2022, the company introduced an affordable subscription tier priced at $8.99 per month, well below its Standard ($19.99 per month) and Premium ($26.99 per month) tiers. Despite the lower price point, these members become more valuable over time because they must watch ads during programming, and Netflix can charge more per ad slot as the viewer base grows.
