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Netflix Stock Has a Lot to Prove on April 17

By Rick Munarriz – Apr 12, 2017 at 4:13PM

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Goldman suggests that Netflix added more new subscribers than it was originally expecting, but at least one rival went the other way last week.

The top dog in premium streaming and one of the market's hottest stocks over the past few years will be reporting fresh quarterly results next week. Netflix (NFLX -0.27%) reports after Monday's market close, and naturally, there's a lot riding on the dot-com darling's performance. 

Netflix has been on fire since recovering from the Qwikster fiasco in 2012. The stock was the S&P 500's biggest gainer in 2013 and 2015. The odds are stacked against it repeating the feat anytime soon. The shares are up a reasonable 16% so far in 2017, but trend watchers can't ignore how well the stock has fared in odd-numbered years -- since 2011 when it was smacked down hard.

Concept art for "Stranger Things" show on Netflix.

Image source: Netflix.

Subs can be filling

Netflix is coming off of back-to-back blowout quarters, but Wall Street can't seem to agree on the platform's ability to grow its audience over the past three months. Goldman analyst Heath Terry issued new research on Wednesday, reiterating his buy rating and $170 price target. He feels Netflix will exceed its initial guidance calling for 1.5 million net additions in the U.S. and 3.7 million internationally.

History would suggest that it's smart for Wall Street pros to aim high. Netflix topped its subscriber targets by at least a million subscribers during the third and fourth quarters of last year. However, after falling short during the second quarter, not every analyst is sold on Netflix as a serial low-baller.

William Power at Baird turned heads last week when his firm's quarterly survey suggested that Netflix will fall short of expectations -- at least when it comes to Netflix's own target for 1.5 million net domestic additions. Terry and Power agree that proprietary content is the catalyst to woo new members, but they can't seem to agree on its efficacy this past quarter. Terry points out that 61 original or exclusive shows rolled out during the first quarter, but Power is concerned that none of them were blockbuster hits like House of Cards or Stranger Things have been in the past.

You'll never see total agreement among analysts, and that's what makes the market tick. Power is neutral with a price target of $138 -- well below Terry at $170, and slightly less than what the stock is commanding these days. 

Netflix shares will be volatile after Monday afternoon's report. Back in mid-January, Netflix's goal for 5.2 million net additions would result in 99 million streaming subscribers worldwide. Waves will be made if Netflix can push that tally north of 100 million, though one may also wonder why Netflix didn't make that announcement if it had already hit that juicy, nine-figure milestone.

Buckle up. There's going to be a lot of moving around next week.

Rick Munarriz owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. The Motley Fool has a disclosure policy.

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