Netflix's (NASDAQ:NFLX) stock price roller coaster is speeding up as we enter the Fall TV-watching season. Shares are up 100% since the beginning of the year -- but down 24% in just the last five weeks.
The volatility can be tied to huge trading volumes: 23 million shares, or more than 5% of Netflix's float, are bought and sold each day. That implies an average holding period of less than one month for this streaming giant that aims to disrupt the linear TV industry during the coming decades. This is not the market's best example of patient investing in action.
Thankfully, Netflix's business prospects aren't nearly as volatile as the stock-price swings suggest. CEO Reed Hastings and his executive team continue to work on expanding into new markets, bulking up their content portfolio, and improving the streaming experience. With those long-term goals in mind, here are a few important upcoming dates for Netflix investors as we head into October.
October 14: Third-quarter earnings
Management is slated to post third-quarter earnings results after the market closes on Wednesday, Oct. 14. Consistent with recent announcements, investors will be treated to a shareholder letter (available here) explaining the results, followed by a live video Q&A discussion with investors on Netflix's investor relations YouTube channel.
Wall Street sees quarterly profit sinking to $0.08 per share from $0.16 per share last year as the company funnels almost all of its earnings into its international expansion. Still, revenue is expected to jump higher by 24%.
Netflix management is targeting adding 3.6 million new subscribers overall: 900,000 in the U.S., and 2.4 million internationally. Each of those figures would represent accelerating growth over the prior year period, which is important if Netflix is going to reach its long-term goal of as many as 90 million domestic members, and many more from overseas markets.
October 16: Movie time
Meanwhile, Netflix continues to push the envelope on TV entertainment. It will launch its first original movie, Beasts of No Nation, on Oct. 16 -- the same day it starts playing in select theaters.
The company is hoping to do with films what it has already achieved with TV series: challenge the industry rules around how they are distributed and watched. Netflix plans at least two more feature film releases next year that will also hit theaters at the same time that they become available to stream, a Crouching Tiger sequel, and a comedy starring Brad Pitt called War Machine.
By adding big-ticket studio films to Netflix's offering, "we're continuing to try to raise the ante to get better at what we do," Hastings explained in last quarter's conference call. "I think that's the key to continuing to hold on to our share as the whole Internet TV market grows," he said.
All through October: New markets
While it hasn't yet announced precise dates, Netflix will launch in three new countries next month: Spain, Italy, and Portugal. This push follows the third-quarter's expansion into just one -- albeit huge -- new market, Japan. Meanwhile, Netflix didn't enter any additional countries in the second quarter. Spain, Italy, and Portugal could move the needle on membership growth as they mature. The three markets have a total of 80 million Internet users, compared to Japan's 110 million.
International expansion is a big drag on Netflix's earnings, with the peak hit coming around the launch quarter. That's why management is projecting increasing losses from the international business in the third and fourth quarter of 2015. Netflix should be in the red by about $80 million internationally next quarter, up from a $30 million loss in the year-ago period.
Losses should continue to grow from there, peaking next year as the company completes its global push. Netflix expects to generate substantial profits on a global basis after that expansion is finished.