Netflix (NFLX) will report second quarter results soon after the bell.

Netflix has guided for second quarter EPS of $0.55 (vs. $0.85 last year) with an operating margin of 12.5% (+70 basis points yr/yr) and revenue up 26% to $4.93 bln.

Netflix also guided for 5 mln global paid net subscriber additions (4.7 mln internal and 300K in a saturated US market) vs. 9.6 mln adds in the seasonally strong first quarter 5.45 mln adds in the second quarter of 2018. The company guided for an operating margin up 300 bps to 13% in 2019.

Guidance for third quarter subscribers will be key; expectations for 6.3 million net subscriber additions would put total paid subscribers at 160 mln.

Some are concerned about competition as Disney+ will launch in November and AT&T's streaming service HBO Max will launch in the Spring of next year.

The majority of subscriber growth will come from overseas going forward, so the question in the US is whether domestic subscribers will actual cancel their Netflix subscription. This seems unlikely for most customers. 


NFLX has traded in a fairly narrow range so far this year, has an ~$160 bln market value, and trades at ~55x EBITDA estimates, ~100x EPS estimates and ~8x revenue estimates for 2019.

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