Netflix earnings: What to watch

Content is king, but where are the biggest players in the streaming wars today? You can’t have that debate without talking Netflix (NFLX); the company that once sent you a DVD inside an envelope releases first quarter results.

From the stock market reaction, to the ad business and that all-important password sharing crackdown: here are three key issues shareholders will be watching.

Video transcript

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BRIAN SOZZI: Netflix earnings are coming up. Here are three things all investors need to watch out for. First and foremost is the reaction to Netflix earnings results. The stock is up 30% year-to-date, and you want to probably see if you've been a bull on Netflix shares. You want to see the stock go up initially, despite those year-to-date gains. If the stock gets clobbered, if it gets clobbered, that might be a signal that the broader overall stock market is overvalued and time to get the hell out.

Number two, you want to see how much of a lift financially Netflix is seeing from the company's new ad-tier business. This was a key rollout for Netflix last year. A lot of folks on the street that I talked to want to see a big financial lift from this ad business finally starting to bear fruit.

And then last thing, third thing, you need to know about Netflix earnings and watch out for, what is the page sharing lift? Netflix has really cracked down on everyone scrubbing passwords from various family members. And in the fourth quarter, they saw a 13 million net additions number because they have cracked down on passwords. The Street wants to see that number around seven or eight million this time around. If Netflix can deliver on that or even be it, the stock is probably going to go a lot higher.

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