Following a year in which Netflix gained a record 37 million subscribers, conventional wisdom indicates that the popular streaming platform won't be able to duplicate, let alone outperform, last year's Q1 sub rise of 16 million subscribers.
Netflix's subscriber base, which surpassed 200 million in spectacular fashion last year, is set to be front-and-center in the streaming giant's quarterly report once again.
According to London-based Ampere Analysis and Los Angeles-based analyst Michael Pachter, Netflix added 6 million subscribers worldwide through March 31, the lowest number of subscribers added in four years.
"It is not quite the end of the pandemic effect for streaming services, but we are beginning to see the tail end of it; it's definitely on the wane," Richard Broughton, analyst at Ampere, told The Guardian.
"If Netflix's numbers do come in as predicted, they will be the lowest for a good few years."
Netflix had slightly more than 203 million users at the end of 2020 and plans to have 209.6 million by the end of the first quarter of 2021. Subscriptions from Europe and the Middle East increased by 41%.
The company is up against tough competition. Amazon Prime Video, the most formidable competitor, counts a subset of its 200 million-plus Prime members as subscribers.
Furthermore, Disney+ is a power to be reckoned with. The service gained over 100 million users in its first 16 months, a feat that took Netflix 10 years to achieve.
According to third-party consensus analyst forecasts, Netflix is expected to report adjusted earnings of $2.97 per share, up from $1.57 in the prior-year quarter. Revenue is expected to come in at $7.13 billion, up 23.6% from last year.
Options traders have priced in an expected share price move of about 6% in either direction around the earnings report.
Looking ahead to the April 23 options expiration, put activity has been light overall, with some emphasis on the 540 strike. Calls have seen a slight increase in activity, particularly at the 600 strike.
