- Recall we track net subscriber adds by tracking the content available while taking into account seasonality and internet penetration rates. These were all statistically significant factors in forecasting net subscriber additions.
- Prior to the T-Mobile deal, we found that Q3 net subscriber additions were on pace to miss Q3 estimates. We estimated 4M vs. NTFX guide of 4.4M.
- Post the T-Mobile deal, we expect Q3 net subscriber additions will exceed Q3 estimates. We estimate 5.34 vs. NTFX guide of 4.4M.
- We forecast that 2.9M T-Mobile Family Plans will be added to NFLX from T-Mobile alone and a few hundred thousand coming from AT&T and Sprint. We estimate about 1.3 million new subscribers will join in Q3.
- Our forecast calls for 5.3M Net Subscriber Additions in Q3 (assumes 40% activate)
- Our forecast calls for the positive impact to be 1.7M in Q4 (assuming 50% of family plan members activate Netflix). We now forecast 8.4M net subscriber additions in Q4 versus 6.7M previously.
- On a fundamental basis, we believe the fair value of NFLX is $152 based on trailing 12-month metrics noted in the valuation section. In Q3 the valuation increases to $212. The current share price we believe is equal weighted between Q2 and Q3. However upon reporting Q3 results we see the share price moving towards $212.
Is the beat priced in? Technicals
By closing above $182 this week, we are more constructive because this signaled a breakthrough of the tower top resistance set back in late July. We see the next resistance not occurring until $190. Therefore we still see room for the stock price to move higher before the Q3 report.
https://perspectec.com/articles/netflix-technicals-update_2017-09-13
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