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Netflix Q1 Earnings Preview: Key Insights and ETF Impact Analysis

Netflix is ​​set to release NFLX's third season in 2024 after market close on April 18th. Before the outcome of the world’s largest video-streaming company, it’s worth looking at the basics.

Over the past three months, shares of Netflix have risen nearly 26%, outperforming the broader industry, which has gained 5.3% over the same period. Strong trading will continue as Netflix has a reasonable chance of beating earnings estimates.

As a result, some ETFs are heavily funded for this streaming giant, such as MicroSectors FANG + ETN FNGS, Invesco Next Gen Media and Gaming ETF GGME, Pacer BioThreat Strategy, ETF VIRS First Trust S-Network Streaming & Gaming ETF BNGE and First Trust Dow Jones Internet index fund FDNs are the focus.

Earning whispers

Netflix has an Earnings ESP of +0.36% and a Zacks Rank #3 (Hold). According to our methodology, a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 increases the probability of outperforming earnings. Our Earnings ESP Filter allows you to discover the best stocks to buy or sell before you get information about them.

The online video-streaming giant saw no change in earnings estimates for the reporting quarter over the past seven to 30 days. Netflix is ​​expected to see revenue growth of 55.9% and earnings growth of 13.4%. The company’s earnings surprise history is impressive, as it has delivered an earnings surprise of 5.43% in the past four quarters. Netflix is ​​an underperformer in the Zacks industry (under 7% of 250+ companies).

Netflix currently has an average brokerage recommendation (ABR) of 1.96 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on actual recommendations (Buy, Hold, Sell, etc.). which has been covered by 40 brokerages. Currently, the ABR compares to an ABR of 1.96 a month ago based on 40 recommendations.

What should I know?

Investors will be watching closely to see if the streaming giant can sustain its impressive subscriber growth, take advantage of ad-supported programs, and continue to dominate the streaming landscape. In its latest earnings call, Netflix expected slower subscriber growth in the third quarter compared to the fourth quarter of 2023, attributing the slowdown to seasonal trends, but is expected to be up from a year ago.

ETFs in Focus

The Microsectors FANG+ ETN is correlated with the performance of the NYSE FANG+ Index, a similar dollar-weighted index. It is designed to identify a group of highly traded growth stocks of next-generation technologies and technology-enabled companies. It holds 10 stocks in the same ratio in its basket, with Netflix’s share coming in at 10%.

Invesco Next Gen Media and Gaming ETF (GGME)

The Invesco Next Gen Media and Gaming ETF offers companies with significant expertise in technologies or products that support the future of media through direct income. It tracks the STOXX World AC NexGen Media Index, which has 94 stocks in its basket. Netflix is ​​the No. 2 company, accounting for 8.4% of GGME’s assets.

Pacer BioThreat Strategy ETF (VIRS)

The Pacer BioThreat Strategy ETF seeks exposure to U.S. stocks. Companies offering their products and services to the market have been identified by having one or more of the seven index topics. It tracks the LifeSci BioThreat Strategy Index, which has 55 stocks in its basket. Netflix holds second place with 5.8% of assets.

First Trust S-Network Streaming & Gaming ETF (BNGE)

The first trust, the S-Network Streaming & Gaming ETF, manages the S-Network Streaming & Gaming Index and has 46 funds in its basket. Netflix is ​​fourth, with 5.3% of assets. By sector, entertainment has the largest share at 44.6%, while hotels, restaurants & leisure, semiconductors & semiconductor equipment, and communication media & services each round out the next three spots with double-digit exposure.

First Trust Dow Jones Internet Index Fund (FDN)

Confidence First the Dow Jones Internet Index Fund tracks the Dow Jones Internet Composite Index, giving investors access to the broader Internet industry. It has about 41 stocks in its basket, with Netflix occupying the fourth spot at 5.3%.

 Conclusion: As Netflix prepares to release its Q1 earnings, the ripple effect on ETFs and broader market indices will be closely watched. This earnings season will not only reflect the current state of Netflix but also provide insight into the evolving state of digital entertainment and technology.