{"id":58762,"date":"2023-07-18T06:00:54","date_gmt":"2023-07-18T10:00:54","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=58762"},"modified":"2023-07-21T23:24:44","modified_gmt":"2023-07-22T03:24:44","slug":"high-stakes-can-tesla-tsla-and-netflix-nflx-surpass-earnings-expectations","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2023\/07\/high-stakes-can-tesla-tsla-and-netflix-nflx-surpass-earnings-expectations\/","title":{"rendered":"High Stakes: Can Tesla (TSLA) and Netflix (NFLX) Surpass Earnings Expectations?"},"content":{"rendered":"<p><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NASDAQ_TSLA\" target=\"_blank\" rel=\"noopener\">Tesla, Inc. (TSLA)<\/a>, the undisputed leader in EVs, is scheduled to release its fiscal 2023 second-quarter results on July 19 after the closing bell. Analysts expect TSLA\u2019s revenue to increase 45.7% year-over-year to $24.67 billion for the quarter that ended June 2023.<br \/>\nThe consensus earnings per share (EPS) estimate of $0.82 for the about-to-be-reported quarter indicates an increase of 8.2% year-over-year. For the fiscal year ending December 2023, the EV maker\u2019s revenue and EPS are expected to increase 24% and decrease 13.2% year-over-year to $100.98 billion and $3.53, respectively.<\/p>\n<p>Streaming giant <a href=\"https:\/\/quotes.ino.com\/charting\/?s=NASDAQ_NFLX\" target=\"_blank\" rel=\"noopener\">Netflix, Inc. (NFLX)<\/a> is also set to report its second-quarter earnings after the market close on July 19, kicking off media earnings season. The company is expected to put light on its subscriber momentum, the progress of its cheaper advertising tier, and the impact of its password-sharing crackdown.<\/p>\n<p>Analysts expect NFLX\u2019s revenue for the fiscal second quarter (ended June 30, 2023) to increase 3.9% year-over-year to $8.26 billion. However, the consensus EPS estimate of $2.86 for the same quarter indicates a decline of 10.8% year-over-year.<br \/>\nIn addition, the company\u2019s revenue and EPS for fiscal year 2023 are expected to grow 7.7% and 13.5% year-over-year to $34.06 billion and $11.29, respectively.<\/p>\n<p>Let\u2019s analyze each stock and determine the chances of them surpassing analysts\u2019 expectations:<\/p>\n<p>TSLA designs, develops, manufactures, and sells electric vehicles (EVs) and energy generation and storage systems in the United States, China, and internationally. The company operates through two segments: Automotive; and Energy Generation and Storage.<\/p>\n<p>TSLA recently released its second-quarter production and delivery numbers, easily beating estimates as the effects of the company\u2019s price cuts, coupled with federal EV tax credits, boosted sales.<\/p>\n<p>In April, the EV maker slashed prices of some of its Model Y and Model 3 EVs in the United States, the sixth time of lowering U.S. prices this year. TSLA\u2019s Model Y \u201clong range\u201d and \u201cperformance\u201d vehicles prices were cut by $3,000 each, and that of its Model 3 \u201crear-wheel drive\u201d by $2,000 to $39,990.<br \/>\nFurther, the Elon Musk-led company lowered prices in Europe, Israel, and Singapore along with Japan, Australia, and South Korea, expanding a discount drive it commenced in China in January to drive demand.<\/p>\n<p>During the second quarter, TSLA produced approximately 480,000 vehicles and delivered nearly 466,000 vehicles. The delivery figures easily beat Wall Street consensus estimates of 448,599 units and the previous quarter\u2019s total of 422,875. Both production and delivery figures for the second quarter were all-time records for the company.<\/p>\n<p>Yet, TSLA, earlier in April, reported a 4% sequential increase in deliveries in the first quarter and a 17.8% sequential rise during the fourth quarter.<br \/>\nFurthermore, TSLA is rapidly expanding its Supercharger network with industry competitors. On July 7, German luxury giant Mercedes-Benz (MBG.DE) became the latest to join Tesla\u2019s Supercharger network. Beginning in 2024, Mercedes-Benz electric vehicle owners would get access to 12,000 Tesla Superchargers across North America via the use of an adapter.<\/p>\n<p>In 2025, new Mercedes EVs in North America would have TSLA\u2019s North American Charging Standard (NACS) port built into the cars for access to the Supercharger network. This deal with Mercedes is similar to TSLA\u2019s other charging partnerships with other automakers, <a href=\"https:\/\/quotes.ino.com\/charting\/?s=NYSE_F\" target=\"_blank\" rel=\"noopener\">Ford Motor Company (F)<\/a>, <a href=\"https:\/\/quotes.ino.com\/charting\/?s=NYSE_GM\" target=\"_blank\" rel=\"noopener\">General Motors Company (GM)<\/a>, <a href=\"https:\/\/quotes.ino.com\/charting\/?s=NASDAQ_RIVN\" target=\"_blank\" rel=\"noopener\">Rivian Automotive, Inc. (RIVN)<\/a>, and <a href=\"https:\/\/quotes.ino.com\/charting\/?s=NASDAQ_AAL\" target=\"_blank\" rel=\"noopener\">Volvo ADR (VLVLY).<\/a><\/p>\n<p>On May 26, TSLA and F announced a surprise deal on electric vehicle charging technology and infrastructure. Under the agreement, Ford owners will get access to more than 12,000 Tesla Superchargers across the U.S. and Canada starting early next year.<\/p>\n<p>In addition, GM followed crosstown rival F in partnering with TSLA to use its North American charging network and technologies. Under this deal, GM owners will get access to Tesla\u2019s 12,000 fast chargers using an adapter and its EV charging app beginning the following year.<br \/>\nSigning on additional partners to TSLA\u2019s charging network is expected to be a boon for the EV maker\u2019s top line. According to Piper Sandler analyst Alexander Potter, charging deals from partners could add upward of $3 billion in revenue by 2030 and up to $5.40 billion by 2032.<br \/>\nThe company\u2019s first-quarter revenue of $23.33 billion was slightly below Wall Street estimates of $23.35 billion. It reported a gross margin of 19.3%, compared to 29.1% in the same period in 2022, as the cost of several price cuts hit its profitability.<\/p>\n<p>Furthermore, TSLA\u2019s net income was $2.51 billion for the first quarter, a decline of 24% year-over-year, and its EPS decreased 23% year-over-year to $0.73. TSLA\u2019s CEO, Elon Musk, also indicated that the company would prefer higher volumes to higher margins.<\/p>\n<p>Analysts continue to ring warning bells on the company\u2019s profit margins. Gary Black, co-founder and managing partner of Future Fund expects TSLA\u2019s adjusted EPS for the second quarter to be around $0.87, higher than the prior quarter\u2019s $0.85 and the year-ago quarter\u2019s $0.76. The consensus estimate stands at $0.82 per share.<\/p>\n<p>However, Gary Black predicts the company\u2019s gross margin to contract as it had offered discounts on its vehicles to boost sales.<br \/>\nAnother stock that gears for second-quarter earnings this week is NFLX. The company offers entertainment services. It provides TV series, feature films, documentaries, and mobile games across various genres and languages.<\/p>\n<p>In May, after ignoring password sharing for many years, the streaming company expanded its crackdown on password sharing across the United States and more than 100 other countries, alerting users that their accounts cannot be shared for free outside their households. It also stated that an additional fee of $7.99 per month would be charged for shared passwords in the United States.<\/p>\n<p>Since the company told its users they could no longer share accounts across multiple households, daily U.S. sign-ups for the streaming service climbed by the most in at least four and a half years. According to data from the analytics platform Antenna, between May 25-28, Netflix witnessed the four single-largest days for signing up of U.S. customers since the firm began tracking this data in 2019.<\/p>\n<p>During that time, NFLX saw nearly 100,000 daily sign-ups on two of the days, based on the report from Antenna.<\/p>\n<p>Furthermore, the streaming giant\u2019s ad-supported tier began to show signs of life six months following its debut. NFLX revealed that its ad-supported tier garnered five million active users globally, with sign-ups having more than doubled since early this year. The company stated that more than a quarter of new signups opt for the ad-supported plan in countries where it is offered.<\/p>\n<p>During the first quarter of 2023 that ended March 31, NFLX reported mixed first-quarter results, missing Wall Street subscriber estimates while surpassing analysts\u2019 EPS estimates. The company reported an EPS of $2.88 compared to the consensus estimate of $2.86. While its revenues increased 3.7% year-over-year to $8.16 billion, it missed the consensus estimate of $8.18.<\/p>\n<p>For the first quarter, NFLX added 1.75 million streaming subscribers, which fell short of the analyst estimate of 2.06 million additions. However, its average paid memberships increased 4% year over year, while the paid net adds were 1.75 million for the quarter compared to a negative 0.2 million in the prior-year quarter. Also, its non-GAAP free cash flow rose 164% from the year-ago value to $2.12 billion.<\/p>\n<p>In recent days and weeks, several analysts have raised their price targets on NFLX\u2019s stock. One central theme across Wallstreet is an expectation of optimistic updates on the progress of the company\u2019s password-sharing crackdown and advertising tier rollout.<\/p>\n<p>TD Cowen analyst John Blackledge said, \u201cNetflix\u2019s paid sharing coupled with the ad tier rollout should drive long-term revenue upside, and the launch of paid sharing in the second quarter of 2023 along with the ramping ad tier should help drive membership and revenue growth in the second half of 2023.\u201d<br \/>\nThe TD Cowen analyst forecasts net subscriber growth of 2.37 million during the second quarter, compared with a consensus estimate of around 1.70 million, and \u201crevenue re-acceleration\u201d in the second half of 2023. John Blackledge reiterated his \u201coutperform\u201d rating and $500 stock price target.<\/p>\n<p>Also, UBS analyst John Hodulik increased his stock price target from $390 to $525 while maintaining his Buy rating.<\/p>\n<p>Hodulik stated, \u201cWe continue to believe paid sharing will drive 5 percent-plus uplift to revenue and see the roll-out as key to driving scale in advertising with the growth in the ad-tier mix and better targeting. Netflix eliminated its basic ad-free tier in Canada (and de-emphasized in the U.S.), which we estimate could provide a 10 percent uplift to average revenue per user over time and should help scale the ad base faster than prior expectations.\u201d<\/p>\n<p>The UBS analyst raised his estimates and predicted second-quarter financials would surpass management\u2019s guidance, adding that he and his team \u201cstill expect accelerating second-half growth.\u201d Hodulik expects 3.60 million net subscriber gains in the about-to-be-reported quarter and 6.50 million in the third quarter.<\/p>\n<h4>Bottom Line<\/h4>\n<p>EV giant TSLA\u2019s better-than-expected delivery and production figures for the second quarter will likely boost the company\u2019s second-quarter earnings. However, concerns still revolve around the impact on margins due to discounts Tesla offered on its new vehicles across different regions. But vehicle prices stabilized in the second quarter after substantial reductions announced earlier in the year.<br \/>\nWhile streaming company NFLX took a hit after reporting its first subscriber loss in a decade last year and mixed financials in the first quarter of 2023, there are higher chances of beating analysts\u2019 estimates for the second quarter, with rising expectations of positive updates on the company\u2019s progress on the password-sharing crackdown and advertising tier rollout.<\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Tesla, Inc. (TSLA), the undisputed leader in EVs, is scheduled to release its fiscal 2023 second-quarter results on July 19 after the closing bell. Analysts expect TSLA\u2019s revenue to increase 45.7% year-over-year to $24.67 billion for the quarter that ended June 2023. The consensus earnings per share (EPS) estimate of $0.82 for the about-to-be-reported quarter [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[32153,32015,32226,32225,32227],"class_list":["post-58762","post","type-post","status-publish","format-standard","hentry","category-general","tag-ford-motor-company-f","tag-general-motors-company-gm","tag-inc-rivn","tag-rivian-automotive","tag-volvo-adr-vlvly"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>High Stakes: Can Tesla (TSLA) and Netflix (NFLX) Surpass Earnings Expectations? - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"description\" content=\"EV giant Tesla (TSLA) and streaming major Netflix (NFLX) are scheduled to report their second quarter 2023 results on Wednesday after market close. 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