This is a big week for Netflix (NFLX -0.60%) investors. The world's leading premium video service reports financial results for the first quarter, and naturally there's a lot riding on the results. 

Recent history has been kind. Netflix stock hit an all-time high the day after it posted its fourth-quarter numbers in January. The shares soared nearly 17% higher in a single day. The bad news is that was the last time that Netflix hit an all-time high. The stock enters this new trading week 9% away from the high-water mark it set three months ago. Netflix has a lot to prove, but thankfully it appears to be up for the challenge.

A woman holding a remote control as she reaches for some popcorn.

Image source: Getty Images.

There's always something good on TV

Guidance for the quarter that just ended was a mixed bag three months ago. It sees revenue of $7.13 billion for the first quarter, a healthy 24% year-over-year gain. The news should be even better on the bottom line. Back in January, Netflix was targeting a profit of $1.35 billion -- or $2.97 a share -- a 91% surge in net income from where it was a year earlier. 

The thornier part of the Netflix guidance garden is its outlook for near-term subscriber growth. The 209.66 million in global streaming paid memberships it expected to have on its books by the end of March represents less than 15% growth. This would be the platform's weakest growth in years. 

The good news here is that all of this was baked into the last report, and the market still responded by sending the shares to a new peak. Another encouraging nugget is that revenue growth is expected to grow a lot faster than its membership tally because average revenue per user is on the rise. Netflix recently rolled out its fifth rate increase to U.S. subscribers in the last seven years. Put another way, the value of its membership base keeps improving. 

One can also argue that Netflix made this call just three weeks into the quarter. A lot can change between now and then. 

Subscriber growth on a sequential basis started to slow in the second half of last year. There were a lot of people stuck at home hungry for entertainment when the pandemic started. The monster subscriber growth that Netflix posted in the first quarter of last year -- going from 167 million members to 183 million members in a span of three months -- will always be a hard act to follow. It ended 2020 with 203.7 million paying homes, but just 29% of the year's net additions happened during the final two quarters of the year.

It's ultimately encouraging that Netflix had a blowout 2020 given the number of new entrants in the marketplace. Several media stocks and tech giants have entered the streaming space since late 2019, and some of them were even hyped as Netflix killers. It turns out that the living room is wide enough for several successful platforms. 

This all ultimately sets the stage for Netflix to make a big move higher or lower during Wednesday's trading day. If subscriber counts suffer as a result of price hike -- something we saw the last time Netflix pushed U.S. prices higher in the springtime of 2019 -- it could fall short of its guidance again. However, with expectations low and the shares already backing off from their January highs it probably wouldn't take much of a beat to send Netflix higher again. Netflix always gives its subscribers plenty to watch, but this week it's giving shareholders something pretty big to watch, too.