Netflix Q2 earnings preview Subscriber growth in focus

When is Netflix reporting: Netflix is due to release Q2 earnings on Thursday July 20, after the closing bell.

What to expect?

Netflix is up against some extremely tough comparisons from a year earlier. Streaming subscriptions surged in the second quarter of 2020 as people looked for ways to entertain themselves in lockdown. Netflix added 10 million new subscribers in Q2 2020 and in H1 2020 Netflix gained almost 26 million new subscribers. To put some context around this figure, Netflix added 28 million subscribers in the whole of 2019.

Management at Netflix believe that a lot of demand for streaming was pulled forward to 2020. This goes some way to explaining why Netflix added just 4 million subscribers in Q1 2021 and offers some explanation as to why Netflix is guiding for just 1 million new subscribers in Q2 2021.

Netflix needs to show that it can grow subscribers when everyone isn’t stock inside. Heading towards the release concerns surrounding the impact of re-opening combined with increased competition are keeping the share price depressed.

Guidance for Q3 subscribers will be under the spotlight amid cautious optimism that numbers should finally start to normalize.

Where next for Netflix share price?

After hitting an all-time high at 593 at the start of the year, the Netflix share price trended southwards hitting a low of $475 before rebounding higher.

Netflix share price moved back over its 50 & 100 dma and above the 6-month descending trend line. The RSI is just tipping into overbought territory so a period of consolidation or an ease lower could be on the cards before further gains.

Buyers could look for a move over $565 for a breakout trade to order to attack 592 and look towards a new all-time high. Sellers could look for a move below $520 to negate the near term up trend. A break below $475 could open the door to $460.

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