Insider Financial icon

Netflix Claims Streaming Supremacy: Can Live Events Be Its Next Act?

The dust from the streaming wars has settled, and Netflix (NFLX) stands triumphant. While its competitors scramble to catch up, investors are eager to see what’s next for the undisputed leader as it reports second-quarter earnings on Thursday.

Netflix’s stock has surged 33% year-to-date, dwarfing the performance of its media rivals burdened by the weight of their own streaming ventures. While some analysts predict a future of slower growth for the company, the consensus remains that significant financial gains are still on the horizon.

However, Netflix’s dominance extends beyond just stock prices. The company has consistently delivered what investors crave – rising profits and sales – even if it meant unpopular decisions like price hikes, layoffs, and content cancellations. This focus on profitability has come at a cost, with viewers and employees likely feeling the pinch.

But Netflix isn’t resting on its laurels. Recognizing the limitations of subscriber numbers as a growth metric, the company is making a strategic pivot. Live events, a domain currently dominated by Big Tech and traditional TV giants, could be the next battleground for Netflix. While the company has taken initial steps with NFL games and celebrity boxing matches, analysts believe they are still playing catch-up to players like Amazon, YouTube, Disney, and NBCUniversal.

The upcoming earnings report will be the first to exclude subscriber figures, a move that has spooked some investors. Wedbush analysts interpret this as a shift towards a slower-growth, higher-profit model, but emphasize that this transformation is ongoing. They remain bullish, believing Netflix’s lead in the streaming wars is insurmountable.

However, Paul Verna, an analyst at eMarketer, cautions that with subscriber numbers out of the picture, investor focus will shift towards financial metrics like ad revenue and content spending. These factors, along with the success of live events initiatives, will be crucial in determining Netflix’s future trajectory.

Beyond Netflix: A Busy Earnings Week

This week promises a flurry of earnings reports from 45 S&P 500 companies, including five members of the Dow 30. Here are some key players to watch:

  • Healthcare: UnitedHealth (UNH) faces scrutiny over its Medicaid business, drug pricing, and a recent cyberattack, while investors keep an eye on Johnson & Johnson (JNJ).
  • Consumer: Domino’s Pizza Inc. (DPZ) reports as inflation continues to impact dining habits, while analysts dissect industry winners and losers. J.B. Hunt Transport Services Inc. (JBHT) also reports in this sector.
  • Financials: JPMorgan Chase & Co. (JPM) recently set aside more funds for bad loans, raising concerns about consumer creditworthiness. This week, Goldman Sachs Group (GS), Bank of America Corp. (BAC), Morgan Stanley (MS), Discover Financial Services (DFS), and American Express Co. (AXP) will offer their perspectives on the state of the financial landscape.
  • Airlines: United Airlines Holdings Inc. (UAL) reports on Wednesday amidst industry concerns about profitability and travel demand. This follows a disappointing sales forecast from Delta Air Lines (DAL), highlighting the challenges of balancing flight coverage with passenger capacity.