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Earnings: 2 Hot Stocks to Watch This Week

By Daniel Sparks – Oct 18, 2021 at 1:51PM

Key Points

  • Netflix reports earnings after market close on Tuesday, followed by Tesla just 24 hours later.
  • Q3 will likely provide important insights into both companies' growth stories.
  • Can Netflix's subscriber growth reaccelerate after slowing recently?

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Get ready. One of these two fast-growing companies is reporting earnings tomorrow.

As earnings season continues to unfold, this week's reports are particularly exciting. Two growth stocks reporting their latest quarterly results this week are streaming TV company Netflix (NFLX -1.12%) and electric car maker Tesla (TSLA 11.00%).

With both companies rapidly growing both their top and bottom lines recently, expectations are high going into their earnings reports. Investors watching these growth stocks should look for more strong momentum from both businesses.

Ahead of their reports, here's a preview of some of the key metrics investors will want to check on.

A person eating popcorn while watching TV.

Image source: Getty Images.

Netflix

Netflix reports its third-quarter results after market close on Tuesday. 

Investors watching the company's third-quarter report will likely be most focused on its subscriber growth. Following a huge growth in paid members last year, fueled by more people staying at home, subscriber growth has slowed significantly recently. The company added about 4 million new members in Q1 and 1.5 million in Q2. This is down from average quarterly additions of more than 9 million members per quarter in 2020. 

Fortunately, Netflix management said in its second-quarter shareholder letter that it expected new member additions to pick back up in Q3. The company guided for 3.5 million new members during the period -- 2 million more than it added in Q2.

Of course, investors will also likely be looking for strong subscriber growth guidance for Q4. For the fast-growing company to continue impressing investors, it will likely need to forecast a significant acceleration in member growth in Q4.

Tesla

After Tesla reported record deliveries of more than 241,000 vehicles in Q3 earlier this month, investors have high expectations for its third-quarter financial results. Specifically, the average analyst estimate currently calls for revenue to increase from $8.8 billion in the third quarter of 2020 to $13.7 billion. Non-GAAP (adjusted) earnings per share is expected to more than double, increasing from $0.76 to $1.54. 

A person unlocking a Tesla with the Tesla mobile app.

Image source: Tesla.

Beyond these metrics, investors will look to see if Tesla ended its quarter with record quarterly order volume again. If demand wanes, this could spook investors.

But investors are likely more focused on supply than demand. To help bolster its vehicle production, Tesla previously said it would begin shipping vehicles from two new factories -- one in Germany and one in Texas -- before the end of 2021. Is it still on track for this target? The opening of these new factories is critical for the company to keep growing sales rapidly. Tesla's extended estimated delivery time frames for new vehicle orders suggest that demand currently outstrips supply.

The electric car maker is scheduled to report its third-quarter results after market close on Wednesday.

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Netflix and Tesla. The Motley Fool has a disclosure policy.

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