Netflix Q1 earnings: What Wall Street will be looking for

Streaming platform Netflix (NFLX) will report its first-quarter earnings after Thursday's market close. Wall Street analysts will be paying close attention to how Netflix's password-sharing crackdown and its new ad-tier subscription model have influenced subscriber figures.

Yahoo Finance Entertainment Reporter Alexandra Canal details what Wall Street is expecting on Netflix subscriber trends.

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This post was written by Luke Carberry Mogan.

Video transcript

- We're looking at a move down about 4/10 of a percent here ahead of the open. But investors are going to be closely watching a number of the key metrics out from Netflix here. Subscriber additions. So one of those key metrics.

Ali Canal is here with a closer look of what to expect at. Ali, when it comes to these results that we're going to be getting from Netflix, what is the key thing that investors or Wall Street is going to be closely watching?

ALEXANDRA CANAL: It's going to be watching how those revenue initiatives, like the password sharing crackdown, the ad tier, how that continues to play out for some of these metrics. You mentioned subscribers. That is expected to slow sequentially after the company reported 13 million subs in the fourth quarter.

Wall Street expecting subscribers of closer to 5 million, although that number could come in above estimates. In terms of revenue, earnings per share, revenue expected to come in at just under 9.3 billion, while earnings per share at $4 and about $0.52 there. Now, like I said, there's a number of revenue initiatives that Netflix has rolled out. Password sharing crackdown being one of them.

A lot of analysts on Wall Street believe there's still more room to run here as some accounts are just starting to be hit. And that could be a boon to subscribers. But the stock is currently trading near the high end of its 52-week highs. It's had a run up over the past several months.

So this is going to be a high bar for Netflix to cross. And a lot of analyst notes out there, although bullish, are saying that could potentially be a risk to earnings. Because when you have such a high valuation, the bar is that much higher when you think about what investors are ultimately looking for.

So that could potentially be a risk to the stock price depending on what we see today. But Netflix continues to remain the number one streaming platform. We've heard even from major media companies, like Disney, they are looking to Netflix as really the guiding light here when it comes how to navigate this very complicated streaming landscape.

- Right. And the activists want the margins to look more like Netflix, at least the Disney activists do at this juncture.