Netflix Trading forecasts and signals

Netflix (NFLX) results for October-December 2021 mostly coincided with consensus expectations, while management forecasts for the next reporting period greatly disappointed investors. After the release of the quarterly report, the shares of the streaming service fell by 20%.The company's revenue grew by 16% YoY, to $7.71 billion, coinciding with preliminary market estimates. Operating margin exceeded investors' expectations, reaching 8.2%. GAAP EPS increased from $1.19 to $1.33 with the consensus of Wall Street experts at $0.83.According to the results of the fourth quarter of 2021, the subscriber base expanded by 8.28 million to 221.84 million, slightly falling short of the expectations of investors and the initial forecast of management at the level of 8.4 million and 8.5 million, respectively. However, many investment houses have previously pointed out this risk, therefore, from our point of view, it was taken into account in the quotes even before the release of the report. The actual data turned out to be even better than some investors had expected. The dynamics of the service's audience growth really slowed down significantly in November after the decline in interest in the series "The Squid Game", but the end of the year turned out to be quite strong due to the busy release schedule and the seasonality factor.Investors were disappointed by the following two aspects of the report:In the first quarter of 2022, the company forecasts an expansion of the subscriber base by only 2.5 million against consensus expectations of 5.8 million. Such a weak gain was an unpleasant surprise for all Wall Street analysts and investors. Management noted that this forecast reflects a higher density of premieres at the end of the quarter compared to its beginning, but the exact reason for the slowdown in audience growth is not yet clear. It is possible that this may be due to macroeconomic factors, as well as competition from other streaming services that are actively expanding geographically.According to management's expectations, the operating margin by the end of 2022 will be 19-20%, which is worse than the preliminary forecasts of investors. The possible strengthening of the dollar will put pressure on the indicator, since 60% of the streaming service's revenue is generated outside the United States, and its expenses are denominated mainly in American currency. According to Netflix, the strengthening of the dollar against major currencies over the last half of the year may lead to a decrease in revenue for 2022 by $1 billion.Such a weak guidance of the management for the current quarter increases uncertainty about the long-term trajectory of audience growth. As a result, we lower the target price for NFLX paper on the horizon of the year from $690 to $505.Despite the significant revision of the target, we still positively assess the long-term prospects of the issuer due to the following key factors:The global transition from traditional TV to streaming will continue, and Netflix is the market leader. The company owns the rights to six of the 10 most popular (according to the Google search engine) TV series of 2021.The subscriber base in the USA and Canada (in the home market of the service) grew by 1.2 million in the last quarter, to 75.2 million (with a consensus of +550 thousand), demonstrating the highest rate of expansion since the beginning of the pandemic. Consequently, the company is able to increase penetration in the most saturated market, despite the growing competition, which is a positive sign.According to management comments, free cash flow will still remain positive in 2022.Despite the growing costs of content creation, management maintains a target to increase operating margin at an average level of +3 percentage points per year, although investors were afraid of a decrease in the gaidens due to the acceleration of inflation. EPS in 2022-2025 may increase by more than 20% on average.The schedule of movie and TV series releases in 2022 is characterized by balance, so audience engagement will be maintained at a high level throughout the year.The epidemic factor no longer leads to delays in the filming process.The company is still actively developing mobile games, so we expect that in order to form an experienced development team, Netflix will continue to enter into small M&A deals, but large acquisitions are unlikely. Netflix will create games based on popular TV series, experimenting with various genres.We expect that in the coming year, investors will begin to perceive Netflix as a company with an effective business model, since the issuer will generate significant free cash flow and conduct a share repurchase program, while competitors are characterized by negative cash flow from streaming due to the smaller scale of the business.Taking into account all these factors, we believe that the reaction of investors to the report is excessively negative, since the long-term prospects of the business have not deteriorated. We believe that the sell-off in the issuer's securities was caused not so much by a change in investors' expectations regarding the company itself, as by a temporary weakening of interest in the shares of most fast-growing chips against the background of the expected tightening of the Fed policy. For this reason, in the near future, Netflix shares may show sideways dynamics or even continue to decline. However, if there are these securities in the portfolio, we do not recommend getting rid of them, since the long-term prospects of the company, in our opinion, are still ...

The market the day beforeYesterday, the American stock exchanges did not work, because Martin Luther King Day was celebrated in the United States. On January 14, the main stock indexes showed mixed dynamics. The S&P 500 rose 0.08% to 4,663 points, the Dow Jones lost 0.56%, and the Nasdaq rose 0.59%. Energy companies looked better than the market (+2.45%) due to the rally in oil prices. The outsiders were the real estate sector (-1.18%) and finance (-1.01%) against the background of the publication of quarterly reports.Company newsWells Fargo's quarterly results (WFC: +3.7%) exceeded market expectations for EPS due to an increase in lending volume, an increase in interest margin and commission income. In addition, a positive guidance was given on interest income and costs.Boston Beer (SAM: -8.1%) lowered its forecast for fiscal year 2021 for EPS due to increased logistics costs.JPMorgan Chase (JPM: -6.2%) reported EPS better than market-wide expectations, management guidance on NII also beat consensus. However, the spending forecast for 2022 disappointed investors.ExpectationsToday, the market will continue to monitor the reporting season in the financial sector. Despite the fairly strong results of the companies for the fourth quarter, the forecast for expenses for 2022 in most cases may turn out to be a negative factor for quotations.Also in the focus of investors' attention remains the question of how significantly the spread of the omicron strain affects the economy. The number of new infections in the United States is still at record high levels of 800 thousand - 1 million per day. Discussions are resuming about possible pressure on supply chains due to the zero-COVID approach adopted in China, which puts major cities at risk of lockdowns. This can lead to port closures, production disruptions and prolonged transport delays. China's four largest port cities have tightened restrictions in response to the spread of the omicron strain. Although the docks remain open for the time being, the possible closure of ports threatens to cause large delays in the delivery of orders. These delays will spread through supply chains and, ultimately, spur inflation. The pressure on logistics chains in the United States is compounded by a shortage of labor due to the large number of infections with the omicron variant. Against this background, respondents surveyed by the WSJ this month lowered their expectations of GDP growth in the first quarter by more than 1 percentage point, to 3% YoY, compared with their forecast of 4.2% in October.Asian stock exchanges ended trading on January 18 in different directions. China's CSI 300 added 0.97%, Japan's Nikkei 225 fell by 0.27%, Hong Kong's Hang Seng sank by 0.43%. EuroStoxx 50 has been falling by 1.11% since the opening of the session.Risk appetite is uncertain. The yield of treasuries rose to 1.77%. Brent crude futures are quoted at $87.6 per barrel. Gold is trading at $1814.7 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4620-4680 points.MacrostatisticsThe NAHB/Wells Fargo Housing Market Index, which reflects the level of confidence of developers, will be published today. According to the consensus, the January indicator will coincide with the December value of 84 points.Technical pictureOn the eve of the open market index found local support at the level of 4615 points, continuing to move within the ascending channel. The shape of Friday's "candle" indicates the possibility of a short-term reversal to growth. The RSI indicator continues to fluctuate near 50 points. The MACD is not giving signals for a reversal yet.In sightToday, the quarterly report will be published by the second largest US bank by assets, Bank of America (BAC). According to FacstSet's forecast, quarterly EPS will reach $0.77 (+18% YoY), net revenue may reach $22.18 billion (+10% YoY). Based on the results of reports from other key US banks published earlier on Friday, we expect that the main support for BAC's non-interest income will be provided by an increase in remuneration for investment banking services (in particular, consulting and underwriting) due to the high activity of companies in the M&A and IPO market. It is expected that BAC will continue to disband reserves for possible credit losses, as management has already indicated a decrease in the share of net write-offs on loans in October-November. Nevertheless, in subsequent reporting periods, the bank may reduce the release of reserves in the context of tightening credit conditions by the Fed. Also, at the end of the quarter, net interest income is likely to show weak dynamics in the conditions of low interest rates, while the growth in lending volumes is only beginning to recover. A decrease in volatility in financial markets may cause a reduction in income from trading operations. The growth rate of net profit at the end of the quarter is expected to slow down due to an increase in operating expenses against the background of bonuses and employee compensation payments at the end of the year, as well as increased investment in technology.On January 20, the streaming service Netflix (NFLX) will present quarterly results. The consensus forecast predicts revenue growth of 16% YoY, to $7.7 billion, with a decrease in EPS from $1.19 to $0.83. It is expected that the subscriber base will expand by 8.4 million, while management three months ago predicted an increase of 8.5 million. We expect a mixed report from Netflix. In particular, we note the risk that the actual growth of subscribers may be weaker than forecasts. The phenomenal success of the series "The Squid Game", most likely, could not provide a stable trajectory of growth in the fourth quarter. However, given the 16% drop in shares since the publication of the last report, we believe that the market has already taken into account more moderate expectations for expanding the customer base in NFLX quotes. The reaction of investors will also depend on whether the company's forecast for the dynamics of the indicator for the first quarter of 2022 coincides with the consensus of expectations, which assumes an audience growth of 5.8-5.9 million people. In addition, an important aspect of the report will be the issue related to the decision to increase the cost of subscriptions in the United States and Canada by about 11%, which was announced on January 14.On January 21, the largest oilfield services company Schlumberger (SLB) will report for the fourth quarter. We expect strong results from the issuer due to increased global drilling activity. On average, the number of active drilling rigs in the last three months of 2021 was 1,537 units, which is 8.2% higher than in the third quarter. SLB's revenue is expected to increase to $6.1 billion (+10.1% YoY, +4.2% QoQ). At the same time, adjusted net profit may grow to $0.39 per share (+77.3% YoY, +8.3% QoQ). In our opinion, the company's shares are trading above fair value, so positive reporting can be considered as a signal for profit-taking on SLB securities. It is worth noting that the first quarter of the year, as a rule, is weak for oilfield service companies due to a seasonal decrease in drilling ...

Netflix's (NFLX) assets have grown by about 6% over the past year. If compared with the S&P 500, this figure was 26% over the same period. The completely non-dynamic paper of the streaming video giant took only second place among the weakest members of the FAANG group, only a drop ahead of Amazon. Is there a real possibility that the asset will go up sharply and show its own result in 2022, which differs by an order of magnitude in a positive direction from last year?This probability is quite real! Today, there has been a slight change in the direction of investors' interests in the market. The fact is that the latter began to gradually abandon the shares of fast-growing tech giants with speculative inclinations. In this regard, it is worth paying attention to a stable and very promising enterprise in terms of planned financial success.Increasing the number of subscribersA serious indicator of the true state of affairs at the enterprise is considered to be a systematic, but constant increase in the number of its subscribers. In the 2nd quarter of last year, 1.5 million people joined the company, in Q3 this figure was 4.4 million users, which is the largest parameter since 2020.After a high jump in financial indicators in 2020, the weak results of last year somewhat annoyed investors. Many have decided that the company's growth has now stalled for a long time, and very soon the company will become one of the losers of the second plan. However, the sharply increased indicators in the 3rd quarter brought back hope that all is not lost yet, and the streaming service has a wide road ahead.Taking into account the calculations carried out by the management of Netflix, by the end of the 4th quarter, the number of active users of the company's services should reach 8.5 million people, which corresponds to 8.5 million attracted over the same period the year before last. If the company manages to maintain these rates of development further, then every quarter the company will receive up to 8-9 million new subscribers.The positives of NetflixNow let's talk about the advantages that no company competing with Netflix has. First, about profitability. So the company's option margin in 2022 should be above 2% of sales. This is almost 2 times more than in the previous one.The company's assets are being sold today with a forward profit of 47, which makes the issuer the second most expensive in the FAANG list. The first in this list is Amazon with an indicator 54 times higher than the forward profit.Another nuance is the high free cash flow by all standards, which just stimulates the growth of the paper to further heights. The company expects to receive a positive cash flow for the first time in a long time.The financial director of the company, S.Neumann, says that in the very near future we can count on this indicator at the level of 15% of sales. This amount is even more than the world's largest issuers receive, for example, Disney. From these funds, it is planned to launch a repurchase of assets from the exchange, as well as spend on increasing the dividend payout.Is Netflix growing?The company finished the third quarter of 2021 in September. At this point in time, the company already had about 214 million paid and active users on its account. By comparison, the issuer completed Q3 2020 with a similar indicator of 195 million. It is expected that by the end of the 4th quarter of this year, the number of subscribers will be 220 million.Many consider Netflix to be the ancestor of the streaming video service. The content offered by the company instantly became popular, and the number of interested users began to grow rapidly. The pandemic stimulated this process, because at the time of the lockdowns, millions of people were chained to TV screens and enjoyed watching really high-quality videos. It all cost some $20 a month. It should not be surprising that during this period the number of subscribers has soared significantly.This is the secret of the company's development and high financial performance – providing high-quality content for little money. Moreover, the subscription price may vary depending on the country. The company offers its users programs, movies, videos for every taste and predilection. These are not only pictures of world film companies, but also series of their own production, which have already gained popularity in the world.Only on September 19 last year, the company received 44 Emmy Awards from the Television Academy – this is many times more than all the others who participated in the award.To watch Netflix content, it's simple enough to have your gadget connected to the Internet. At the same time, the image quality remains consistently high. These advantages will remain in the future, so the company is waiting for only bright prospects for attracting an increasing number of customers.Today, the main goal of the streaming service is considered to be 30 billion in revenue per year. Over the three quarters of last year, the company spent $12 billion on improving its own content. If we compare with the same period last year, $8.5 billion was spent on the same needs.These sums allowed the creation of several blockbusters, for example, the multi-series Squid Game, which has already been watched by 142 million families. It is very noteworthy that the company does not need to spend money on advertising, since word of mouth in social networks and personal communication of subscribers performs this moment for it. The company has spent years to form its own big name, and now it deservedly rests on its laurels.It is noteworthy that the company's business is growing, and its assets are relatively inexpensive. Judging by the state of the price to profit, which shows a ratio of 55, then, since 2012, this is the minimum cost.The enterprise has reached such a scale today that it is difficult and expensive to compete with it. The company offers excellent service in comparison with alternatives at the most favorable price. Today, the value of assets is quite attractive to buy.Despite this, it is not recommended to purchase an asset now, while sellers still hold the palm. There are no signs of a reversal yet, but it's worth refraining from ...

The coronavirus pandemic has dramatically increased the popularity and revenue of streaming services around the world.  According to PricewaterhouseCoopers (PwC), the industry's global revenue grew by a phenomenal 26 percent in 2020.But quarantine restrictions are gradually being lifted, cinemas are opening, people spend less time at home.  It can be assumed that in these conditions, the growth rate of the industry will become more modest.  On the other hand, content viewing from mobile devices continues to grow rapidly worldwide, and the deployment of 5G networks will further strengthen this trend.The global streaming services market is expected to grow by an average of 10% per year until the end of 2025.  According to forecasts, the United States will remain the largest market for companies in the industry in the coming years. However, the gap between America and the rest of the world will gradually narrow due to higher growth rates in emerging markets. Companies that will work to expand the geography of their services will be able to provide their business with faster growth. India, Canada, Japan and China look the most promising in terms of growth rates and potential market volume.In my opinion, in the conditions of increasing competition, the growth of the industry will continue, but its speed will become more moderate. Streaming companies will have to pay more attention to creating original content and improving its quality, as well as building ecosystem solutions around their services. This will help maintain the loyalty of the audience and generate additional sources of income.  Netflix (NFLX) remains the leader of the sector, but Walt Disney (DIS) looks more advantageous now.  Firstly, it continues to increase the number of subscribers to its services, and secondly, it is increasing revenues from its entertainment infrastructure against the background of the lifting of quarantine ...

The market on the eveOn July 19, US stock markets closed in the red zone. The S&P 500 fell 1.59% to 4,258 points, while the Nasdaq fell 1.06% and the Dow Jones sank 2.09%. All sectors of the S&P 500 showed negative dynamics. The outsiders were energy companies (-3.59%), which reacted to the fall in oil prices after the decision of OPEC+ to increase production. The financial sector (-2.8%) was also under pressure amid a decline in the yield of treasuries. Investors are concerned about the increase in cases of infections with new strains of coronavirus.Company newsThe biotech company Cytokinetics (CYTK: +40.4%) has published positive results of the 2nd phase of trials of a drug for the treatment of hypertrophic cardiomyopathy.Zoom (ZM: -2.2%) is absorbing Five9 (FIVN) for $14.7 billion in shares at a premium of about 13% to Friday's closing price. The purpose of the transaction is to expand the business in the corporate segment.Tractor Supply (TSCO: -4.3%) reported better than investors ' expectations for the 2nd quarter, but the audience growth rate decreased compared to last year.We expectToday, there is a mixed dynamics on the world stock markets. Market participants assess the potential of the threat associated with an increase in the number of new cases of coronavirus infections against the background of the spread of the delta strain among the unvaccinated population. In particular, the incidence of COVID-19 in the United States has reached the levels of the beginning of July 2020. There is also an increase in hospitalizations and deaths. The CDC estimates that 97% of patients admitted to the hospital with a severe course of the disease were not vaccinated. At the same time, the current progress of the vaccination campaign should slow down the spread of the disease and reduce the number of severe cases. As a result, we believe that the re-introduction of serious quarantine restrictions that can put significant pressure on economic activity is unlikely at the moment.The investment community is also focused on bipartisan negotiations on an infrastructure package. Clarification of the financing methods continues ahead of the vote scheduled for Wednesday.Asian stock markets closed mainly in the red zone. Hong Kong's Hang Seng fell by 0.81%, Japan's Nikkei 225 fell by 0.96%, and China's CSI 300 sank by 0.09%. EuroStoxx 50 is growing by 1.16%.Risk appetite is weak. The yield of 10-year treasuries is reduced to 1.19%. The price for Brent futures drops to $69 per barrel. Gold is trading near the level of $1813 per troy ounce.We expect that the S&P 500 will hold the upcoming session in the range of 4250-4310 points.MacrostatisticsThe publication of significant macrostatistics is not planned for today.ReportsOn July 20, the giant of the video streaming market Netflix (NFLX) will publish a report for the second quarter. Investors predict revenue growth of the company by 19% y/y, to $7.3 billion, with an increase in EPS from $1.59 to $3.18. The reports are likely to show a slowdown in the growth of the number of subscribers. We believe that in accordance with the calculations of the company's management,the audience of the service expanded by 1-1.5 million over the past quarter. The focus of investors' attention will be the forecast for the next quarter. They expect that the user base of the service will expand by 5.5 million due to the activation of releases of new films and TV series. Investors will also be interested in management comments on the development of the gaming segment of the business. We are optimistic about the prospects for Netflix shares in the second half of the year.Sentiment IndexThe sentiment index from Freedom Finance remained at the level of 68 out of 100, reflecting the positive mood of investors ahead of the publication of the reports of the largest companies for the second quarter of 2021.Technical pictureTechnically, the S&P 500 continues to move in a long-term uptrend. On the eve of the broad market index accelerated the correction, breaking down the "rising wedge"figure. The RSI indicator fell below the neutral level, signaling the increasing strength of the "bears", but the short-term correction was realized, finding support at the level of the 50-day moving ...

They say there is nothing to do at the market in the summer. But not this year. Last week, the reporting season started in the United States. The reports of American companies for the second quarter promise to be interesting. They will summarize the results of the first half of the year and allow you to make forecasts for the second half of 2021.Why follow the reports?The publication of reports allows you to look at the reported company with new eyes — to see it "as for the first time", re-evaluate the prospects for its development and find new objects for investment.Many companies in their reports give forecasts not only for their activities, but also for the development of the sector as a whole, and also share important statistics. This information helps to analyze the prospects of the issuers themselves and the industries in which they operate. The main points that may affect the forecasts of companies this season are the prospects for the global economic recovery, the fiscal policy of the Joe Biden administration, and trade relations between the United States and China.For speculators, the reporting season is interesting with strong movements in the market. Since companies in the United States usually publish reports before or after trading, significant "gaps"often occur at the opening of the trading session after the release of the report.How did the reporting season start?The reporting season in the United States, as usual, began with the publication of the financial results of the banking sector. Five of the six largest banks reported significantly higher than expected and reduced the volume of loan reserves, signaling that the risks associated with the pandemic are receding.In addition to banks, some large companies from other sectors — for example, PepsiCo and Delta Air Lines-managed to report. And companies such as Nike, Micron Technology and Oracle generally report much earlier than the traditional reporting season.This week, investors are waiting for reports from Netflix, Philip Morris, Johnson & Johnson, Coca-Cola, Verizon, Intel, AT&T, Twitter and many other companies.What are the forecasts?According to statistics, in the last five years, in 75% of cases, the reporting of American companies exceeded analysts ' forecasts, and in the 1st quarter of this year, 86% of the reported issuers beat the expectations (this is the maximum level for five years). On the one hand, such high figures may indicate the strength of the US corporate sector, but there is a feeling that companies and analysts are deliberately making too conservative forecasts in order to give shares a boost to growth at the reporting release. From these positions, 85% is more frightening than encouraging figure.According to forecasts, in the second quarter, the percentage of companies whose financial results will be better than expected will be 77-80%. It is also predicted that the consolidated EPS of the S&P 500 index in the second quarter will show an increase of 63.6% y/y and 6.5% q/q.How will the reporting season affect the market?If this reporting season does not bring a big negative, we can expect further growth of the American stock market. If the reports are worse than expected, and the situation with the coronavirus pandemic worsens, or the Fed begins to curtail its stimulus policy, a correction may begin in the market.In general, there are 2-3 companies in each sector of the economy, whose reporting largely sets the tone for the dynamics of shares in the entire sector as a whole.Whose reports are of the greatest interest this week?  Netflix (NASDAQ: NFLX) On July 20, the second season of “The Witcher” may cause a new rally for the company's shares. The company is also entering the video game market: Netflix has hired Mike Verda, who was developing video games for Facebook's Oculus virtual reality headsets (NASDAQ: FB).Coca-Cola (NYSE: KO) On July 21, the main intrigue of this report is how much the company's sales will fall after the episode with Cristiano Ronaldo, who at one of the press conferences removed bottles of Coca-Cola from the table with the words "Drink water!".Johnson & Johnson (NYSE: JNJ) On July 21, investors will be watching with interest how the company's results were affected by the suspension of sales of its coronavirus vaccine in the United States due to concerns that this vaccination contributes to the formation of blood clots. Recall that in the 1st quarter, the company's profit from sales of the vaccine amounted to $100 million, that is, just over 2% of the total profit.Twitter (NYSE: TWTR) On July 22, Twitter launches a "blue" subscription. Twitter Blue allows you to set a delay of 30 seconds when publishing a message and correct typos before the tweet is published. The subscription also provides access to an improved bookmark system for saved tweets. The subscription price is $2.99 per month.American Airlines (NASDAQ: AAL) On July 22, American Airlines announced an improvement in its forecasts for the results of the second quarter. The airline's forecasts range from a net loss of $35 million to a net profit of $25 million for the quarter.American Express (NYSE: AXP) On July 23, the company is expected to present a strong report, as well as report a decrease in reserves to cover the risks associated with the coronavirus pandemic.How to analyze the reporting? Tips for investorsExamine the reporting calendar and select the reports that you will track. Study the company and the sector in which it operates in advance.Remember: buying shares before the report is released is a big risk, although the market can give you a good premium for your courage.Do not rush to buy paper immediately after the release of the report: study the figures and assess the company's prospects on the short, medium and long time horizon.Compare the published figures with the forecasts of the company itself and independent ...

The coronavirus has greatly affected businesses around the world. Some areas have gone into the shadows, while others, on the contrary, have become leaders. One of these industries is streaming TV, which entertained the public while there was a lockdown. Market participants who have considered investing in broadcasters are certainly considering Disney+ and Netflix.The background for these companies is that both businesses are growing. The difficulties faced by the House of Mickey Mouse with the closure of amusement parks due to quarantine measures to combat the coronavirus do not prevent investors today from focusing on the assumptions of positive profit growth of this entertainment titan.As the number of vaccinated people increases, theme parks open, and the Disney+ streaming platform increases the popularity of content, creators can count on significant profits. Netflix is also moving forward. In addition to video materials in the content, the company plans to create computer games.Let's see if it is possible to invest profitably in the securities of these companies now?Grown-up NetflixFor a long time, Netflix securities held strong positions and were considered profitable in the market. Their annual growth since 2002 has been on average about 40%. But now the company is at a new stage of "mature business". The key focus of the market, which includes, for example, the North American market, is now slowly growing. New subscribers are not very active: their increase over the past year is very small – less than 10%. But the company still has opportunities to enter global markets. Today, more than half of the buyers live here, although it is still far from 100% coverage of this market.As Hollywood studios and cable operators begin to restore their work in the media broadcasting market, the analyzed service is becoming more and more profitable.Perhaps this trend can lead to the fact that pay TV will fade into the background, and streaming platforms will become more popular among users. For investors, there is one main point-the new service is mainly broadcast in the United States, and accordingly Netflix is not so bad.The profitability of the business is growing as the number of new subscribers slows down. Netflix experts predict that the operating margin could grow from 18% to 20% this year, about 3% next year and 29% by 2024.It is already clear that Netflix is turning into a profitable enterprise. The streaming service's business model has pursued this goal since its inception. For this purpose, a high margin was formed, and the funds from the additional profit were added to the net profit. The increase in revenue can be achieved by changing the pricing policy, and not only by attracting new subscribers. This is already happening in America and, thus, determines the profitability of the company. In addition, the increase in prices will affect the increase in margins. Now it is unlikely that the issuer will achieve an increase in prices for its securities of 40%, but Netflix is still a strong leader in the streaming market.Disney RestorationLike other enterprises, Disney could not avoid the consequences of the epidemic. We all remember that cinemas, amusement parks and resorts were closed, and sports events were suspended. And even under these conditions, some parks have now restored their work and are accepting customers, although their work is still far from being fully implemented.This did not become a negative factor for investors, and when Disney+ appeared, the value of the company's securities became a record. Disney+ streaming events are Hulu, ESPN+, Star in the global market and Hotstar in the Indian television market. Disney predicted 60-90 million users of the Disney+ service by 2024, but they were able to make this figure faster – in one year. Now experts believe that this year the number of new customers will be 300-320 million.It is impressionable that Disney+ does not seek to develop in accordance with the original content. After streaming television was launched with the production program The Mandalorian, the company's management decided to switch to broadcasting not only its content, but also the production of Marvel, Star Wars, Pixar and other novelties. Disney is very confident in the streaming business, so it is ready to release two hits at the same time Black Widow and Cruella at the same time in cinemas. For a fee, they can be reviewed on Disney+.In the short term, streaming can be considered as the main engine of Disney's growth. It is important for depositors that there are opportunities for economic recovery, and when travel becomes the safety standard again, amusement parks are likely to pay off.Risks of companiesIn 2020, the entertainment industry has become fast-growing, especially after the COVID outbreak. As a result, the securities of the issuers presented in our material also increased. At the moment, the growth of vaccination of people has led to the fact that people from different countries prefer active recreation, and the possibility of subscribing to streaming programs is becoming less popular. It is likely that as the quarantine continues to decrease, subscribers may refuse to stream video, which is a negative factor for both companies.In the short term, the enterprises under consideration may suffer due to increased competition in the market, a reduction in the number of customers and delays in publishing content.Netflix and Disney are big entertainment companies, and both have good opportunities for a return on investment. Both companies are investing heavily in the development of their industry. Disney has an advantage over Netflix-theme parks and specialized retail outlets.If you think that Netflix can get a large part of the streaming market thanks to not yet some secret plans, choose Netflix papers.For those who are interested in companies with different profitable segments in their portfolio, we recommend taking a closer look at ...

On Wednesday, it was reported that Netflix has hired Mike Verda, a former vice president of Facebook, to head the video games division. The company's shares rose by 1.34% in the main trading session and added another 2.65% in the postmarket.What happenedAt the start of his career, Verdu founded his own software development company, later he sold it and switched to video games. He worked for such companies as Atari, Electronic Arts, Kabam, and oversaw various game franchises. At Electronic Arts, he was engaged in mobile video games, the division released such well-known projects as The Sims, Plants vs Zombies and Star Wars: Galaxy of Heroes. Verdu was the creative director of Zynga in the period 2009-2012.Netflix declined to comment officially, without confirming the fact of hiring Verdu. In the past, the company has already released games, but only as a marketing move, and not on a permanent basis — and in 2018, it categorically stated that it does not plan to engage in games at all. Nevertheless, rumors about Netflix's entry into the gaming business have been circulating — and it seems that they have finally come true.Netflix is trying to diversify its video streaming business in the face of growing competition from Disney, Amazon, Apple, AT&T. An online store was recently launched, but it will probably bring less revenue than game development.What elseFinanceNext week, on July 20, the company will report on the results of the second quarter of 2021. Netflix forecasts EPS of $3.16 with sales of $7.3 billion. Analysts had expected Netflix's earnings to be $2.68 per share on sales of $7.39 billion. A year earlier, Netflix's profit was $1.59 per share on sales of $6.15 billion.If there is a positive trend in the company's finances, then there is not a positive trend in the number of subscribers. Last quarter, Netflix attracted fewer customers than expected. In the second quarter, it forecasts only 1 million-against 4.4 million predicted by analysts. Weak results are easy to explain. First, the pandemic is a unique phenomenon that has given a huge boost to new connections. The current increase will be clearly less than last year. Secondly, many projects have been postponed, but are expected this year. This can contribute to the growth of the number of new subscribers and those who will renew their subscription.The company also expects that in 2021 the free cash flow will reach the break-even level, and in 2022 it will become positive. In the future, Netflix will be able to conduct a share buyback, which will be a good driver for growth, but this story is long-term.AwardsOn Tuesday, at the 73rd annual Emmy Awards, Netflix received 129 nominations, which is less than the record of 160 nominations set by it last year.In 2021, the company did not take the championship, becoming only the third. The first and second places went to Disney and AT&T, with 146 and 138 nominations, respectively.About childrenThe company also continues to increase children's content. On Wednesday, Netflix launched the Kids Top 10 program, which recommends content in children's profiles, taking into account its popularity in each country.This week, Netflix will begin sending parents a so - called "Children's Resume" - a newsletter that includes recommendations based on their children's favorite shows and movies, as well as other tips.Netflix and Universal Pictures from Comcast are also extending a multi-year deal for exclusive rights in the United States to the franchises of animated films "Minions" and "Puss in Boots". Now Netflix broadcasts other films of the film company, including "Despicable Me" and "The Grinch".Technical pictureThe growth of the last 2 trading sessions allowed us to close the gap down, which occurred at the end of April after the publication of the report. Now buyers are testing the resistance of $555, its overcoming from the bottom up will open the way to the next reference point of $566.But it is worth considering the RSI indicator: the weekly one does not yet report overbought, and the daily one is already entering this zone. There is still room for growth in the short term, but a correction may occur on the approach to $566.It can begin even earlier if the nearest resistance is not taken. The current risk is reduced to the point of $530, with a breakdown of the level from top to bottom, a test of the 21-day moving average around $520 may occur.The long-term outlook remains moderately positive. The imminent release of the financial report can support buyers at a short distance, then new goals will appear.Since the beginning of the year, Netflix shares have grown by only 1.3%, and over the past 12 months - by ...