Trading Netflix Following Earnings

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Netflix (NFLX) is expected to report earnings on Wednesday, October 14th. The whisper number is $0.11, three cents ahead of the analysts’ estimate and showing confidence from the WhisperNumber community. Whispers range from a low of $0.07 to a high of $0.15. Netflix has a 72% positive surprise history (having topped the whisper in 18 of the 25 earnings reports for which we have data).

Earnings history:

– Beat whisper: 18 qtrs
– Met whisper: 3 qtrs
– Missed whisper: 4 qtrs

Our primary focus is on post earnings price movement. Knowing how likely a stock’s price will move following an earnings report can help you determine the best action to take (long or short). In other words, we analyze what happens when the company beats or misses the whisper number expectation.

The table below indicates the average post earnings price movement within a one and thirty trading day timeframe:

NFLX1015A

The strongest price movement of +1.3% comes within ten trading days when the company reports earnings that beat the whisper number, and -7.2% within twenty trading days when the company reports earnings that miss the whisper number. The overall average post earnings price move is ‘as expected’ (beat the whisper number and see strength, miss and see weakness) when the company reports earnings.

The table below indicates the most recent earnings reports and short-term price reaction:

NFLX1015B

The company has reported earnings ahead of the whisper number in three of the past four quarters with a whisper number. In the comparable quarter last year the company reported earnings five cents hsort of the whisper number. Following that report the stock realized a 9.9% gain in five trading days. Last quarter the company reported earnings one cent ahead of the whisper number. Following that report the stock realized an 8.5% gain in twenty trading days. Overall historical data indicates the company to be (on average) an ‘as expected’ price reactor when the company reports earnings.

WhisperNumber provides detailed earnings analysis and earnings trade alerts. Learn more here.

 

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