Netflix Knows What It Needs to Do This Week

If you're nonstop binge-streaming on Netflix (NASDAQ: NFLX), you're going to eventually be hit with a prompt. Are you still watching? There's a win-win reason for the interruption. On the viewer's end, you don't want to lose your place in a series if you've dozed off or had to go somewhere else. For Netflix, it obviously doesn't want to pay for squandered internet data.

Netflix investors get a different kind of prompt. Every three months, the world's leading premium streaming video service offers up a financial update. Every quarter matters, even for long-term investors like you and me. As a Netflix investor since 2002 -- yes, the year it went public -- I'm looking forward to Thursday afternoon, when it announces its first-quarter results. Are you still investing? Netflix knows it needs to keep you interested as an investor as well as a subscriber.

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House of Cards

Guidance that Netflix issued in January calls for nearly $12.16 billion in revenue in the first three months of this year, a 15% increase over the prior year's results. At the other end of the income statement, Netflix was targeting a 13% move higher to $3.3 million in earnings, or $0.76 per share.

A lot has happened since Netflix offered that outlook. A month later, it nixed its deal to acquire Warner Bros. Discovery. The move resulted in Netflix collecting a $2.8 billion termination fee. A month after that, Netflix announced it would raise prices for its U.S. users.

Where do Wall Street pros stand after all of this? They are pretty much where Netflix was three months ago, eyeing a profit of $0.76 a share on $12.17 billion in revenue.

The chunky bonus for letting Warner Bros. Discovery go with a higher bidder is a one-time benefit. Analysts are backing it out of their current models. The subscription hike is material, but it didn't kick in until March 26. In short, it was only in effect for the last few days of the quarter. Most of its subscribers will see the new monthly rates kick in this month.

Netflix stock has more than tripled over the past three years, but it's up a modest 14% over the past year. Investors didn't appreciate Netflix striking a costly deal for Warner Bros., but that is off the table, and Netflix collected a 10-figure participation trophy in the process. Netflix did fall short of analyst profit targets in the third quarter, but those results were weighed down by a one-time charge related to a tax dispute in Brazil.

This doesn't free Netflix from the responsibility of putting out a market-comforting quarter on Thursday afternoon. Subscribers and investors alike will be watching. Netflix can't give them a reason to stop.

Rick Munarriz has positions in Netflix. The Motley Fool has positions in and recommends Netflix and Warner Bros. Discovery. The Motley Fool has a disclosure policy.