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Should You Buy Netflix Stock Before Its Q3 Earnings Report?

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Netflix is gearing up for its third-quarter earnings report. As the COVID-19 pandemic keeps many people at home, online video services have been seeing a spike in demand. Should you buy Netflix stock ahead of the earnings? 

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When is Netflix’s earnings date?

Netflix plans to report its third-quarter earnings on Oct. 20 at 4:00 p.m. ET after the closing bell. The company's earnings will be for the third quarter ended September 2020. Soon after posting the results, Netflix executives and CEO Reed Hastings will host a conference call to discuss the results. A video of Netflix's earnings call will be available on the company’s investor relations website about two hours after it publishes the results.

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Netflix’s internal forecast calls for third-quarter revenue of $6.33 billion and an EPS of $2.09. Wall Street's consensus calls for Netflix’s earnings report to deliver $6.38 billion in revenue and an EPS of $2.14. 

In the third quarter of 2019, Netflix’s earnings report delivered $5.25 billion in revenue, which matched the consensus estimate. The company posted an EPS of $1.47, which beat the consensus estimate at $1.05. While the COVID-19 pandemic is damaging other global economic sectors, it has delivered a boom for online video companies like Netflix. For example, the company has been adding a record number of new subscribers in recent quarters.  

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What is Netflix's stock price today?

Netflix stock fell 0.72 percent to trade at $537.56 in the pre-market session on Thursday, Oct. 15. The stock dropped 2.28 percent on Oct. 14 and closed at $541.45 after trading in the range of $541–$572.49. Netflix stock is up 67 percent in 2020 but still trades about 6.0 percent below its 52-week high of $575.37.

Netflix's stock forecast

Should you buy Netflix stock ahead of the earnings report? The most bullish analyst sees a 24 percent upside potential in Netflix stock to $670 in 12 months. However, the most bearish analyst sees Netflix stock crashing nearly 60 percent from the current level to $220. Most of the analysts recommend buying Netflix ahead of the earnings report.

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Does Netflix pay dividends?

Netflix doesn’t pay dividends right now. The company reinvests its profits in the business to drive future growth. Content accounts for a significant portion of Netflix’s expenses. On content, Netflix spends original productions and title licenses. 

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As competition in the online video streaming market intensifies with Disney coming up with Disney+, Comcast coming up with Peacock, and AT&T debuting HBO Max, Netflix counts on its strong content strategy to stand out. 

It isn't strange that Netflix doesn’t pay a dividend. Most high-growth tech companies don’t pay dividends. For example, in the FAANG group, which includes high-flying tech companies Facebook, Apple, Amazon, Netflix, and Google parent Alphabet, only Apple pays dividends. eBay is another tech company that pays dividends.

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