Netflix Earnings Preview: What Analysts Are Saying

Netflix reports its fourth-quarter earnings on Monday afternoon, and Wall Street will be paying close attention to any blip in the streaming entertainment giant’s growth.

For instance, Netflix’s latest price increase—the cost of standard plans jumped $1 per month, to $10.99—went into effect during the fourth quarter. If the price hikes slowed Netflix’s subscriber growth in the final months of 2017, then history shows the company’s share price will likely suffer. For what it’s worth, though, Netflix’s stock rose after the company announced its price hike in October because many investors bet on higher revenues.

Later in October, Netflix reported its third-quarter earnings, showing nearly $3 billion in revenue for that period and 5.3 million net subscriber additions. The company’s stock has remained on a tear to start 2018 and it currently sits near an all-time high, above $220 per share.

The consensus from Wall Street analysts is that Netflix will report fourth-quarter revenue of about $3.28 billion on Monday, while Netflix’s own guidance last October predicted an additional 6.3 million global streaming subscribers over that same period. Here’s what some of the analysts following Netflix are expecting from the streaming service’s quarterly update on Monday.

Justin Patterson, Raymond James

Raymond James analysts sent a mixed message about Netflix’s upcoming earnings. On one hand, “Netflix has rarely increased prices without experiencing some impact on the business,” they wrote, while also raising concerns about Walt Disney’s planned acquisition of 21st Century Fox assets could create more competition in the streaming market.

However, Patterson and other analysts at Raymond James also said they would maintain their “outperform” recommendation for Netflix shares (raising their target price for Netflix shares from $220 to $260) while projecting fourth-quarter revenue of $3.3 billion that would beat Wall Street expectations by 1%. Raymond James expects Netflix’s success in international markets and its overall depth of content—from an $8 billion annual programming budget and global hits like the series Stranger Things and The Crown—to keep attracting new subscribers. The analysts predict that Netflix will beat its own estimate of 1.25 million new domestic subscribers in the most recent quarter, with Raymond James expecting roughly 1.32 million net adds in the U.S.

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Mark Mahaney, RBC Capital Markets

Meanwhile, RBC is expecting “no significant reaction to [the] pending price increase” in Netflix’s upcoming quarterly report. Mahaney and the analysts at RBC cite their own survey results showing that 56% of U.S. respondents watched Netflix during the fourth quarter, up from 53% in September, with the “lead widening vs. YouTube and Amazon.” RBC predicts that Netflix added 6.3 million new streaming subscribers in the fourth quarter, which is in line with Wall Street’s forecast. “We believe that Netflix has achieved a level of sustainable scale, growth, and profitability that isn’t currently reflected in its stock price,” the RBC report says.

David Miller, Loop Capital Markets

Miller praised Netflix’s performance so far in 2018 (the stock is already up more than 13% this year), and he believes the company’s shares still have room for growth as Netflix “remains one of the only true large-cap growth stories in media.” He expects Netflix to have finished 2017 with 23.3% subscriber growth overall, including 6.4 million new streaming subscribers in the fourth quarter between the U.S. and international markets (which does not count losses among DVD-only members, whose subscriptions have been steadily declining).

Jeff Reeves,

Reeves expects Netflix to beat its earnings guidance “in a big way,” he told Fortune. “They put up record numbers in October, guidance was strong for the current report, and there’s a lot of momentum there for shares,” he said. However, Reeves threw in some caution for the coming months, adding that he’s “seriously concerned” about how Netflix fares after March as expectations continue to grow while the company faces obstacles like its negative operating cash flow and growing competition from companies like Walt Disney.

Tim Nollen, Macquarie Capital

Macquarie upgraded Netflix shares from “neutral” to “outperform” earlier this month as the firm undergoes a “broad realignment of views on media, where we prefer companies with subscription over ad-driven content, and scaled distribution with an international presence.” The analysts’ report credits Netflix for changing how people watch TV while also expanding further into the movie market. “Consumers’ increasing lack of tolerance for advertising drives them to subscription OTT services, and Netflix is miles ahead of peers,” the report says, using industry lingo for streaming. Macquarie also adds that Disney’s planned streaming push is still far off, which gives Netflix an advantage with its already strong (and growing) subscription base.

Barton Crockett, B. Riley FBR

B. Riley’s Crockett is a bit more cautious with Netflix than most other analysts, as the group’s latest report maintains a “neutral” rating on Netflix stock. The analysts wrote on Friday that they believe Netflix can beat its guidance and Wall Street forecasts for fourth-quarter subscription growth with the addition 6.32 million global streaming subscribers in its most recent quarter. However, the B. Riley analysts’ caution is based on concern that Netflix faces a “notable execution risk in the need to continually develop more impactful content to keep boosting subscriber growth.” In other words, Netflix relies on continued impressive subscriber growth to boost revenue amid increasing costs for programming, which means that the streaming service faces the daunting task of constantly rolling out more and more popular TV series and films to satiate its growing subscriber base’s appetite for new, compelling video content.

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Facebook, Twitter Take New Steps to Combat Fake News and Manipulation

Facebook and Twitter both revealed on Friday more about how they plan to deal with the spread of fake news and propaganda on their services.

Facebook said that it would ask its users to tell it which news sources they read and trust to help it decide which ones should be featured more prominently. These responses will help “shift the balance of news you see towards sources that are determined to be trusted by the community,” CEO Mark Zuckerberg explained in a Facebook post.

Meanwhile, Twitter said in a blog post that it would email nearly 678,000 users that may have inadvertently interacted with now-suspended accounts believed to have been linked to a Russian propaganda outfit called the Internet Research Agency (IRA).

The announcements come amid intense scrutiny by U.S. lawmakers over both Facebook and Twitter’s role in letting Russians and others spread misinformation during the 2016 presidential election. The goal, according to U.S. intelligence agencies, was to divide Americans on politically charged issues like race, religion, and gun control.

Zuckerberg announced the Facebook news just days after his company said it would revamp its news feed to show users more family-friendly posts from friends or acquaintances that Facebook believes will spur more user interaction.

“There’s too much sensationalism, misinformation and polarization in the world today,” Zuckerberg said about the polling of users about the sites they have confidence in. “Social media enables people to spread information faster than ever before, and if we don’t specifically tackle these problems, then we end up amplifying them.”

He added: “This update will not change the amount of news you see on Facebook. It will only shift the balance of news you see towards sources that are determined to be trusted by the community.”

It’s unclear how Facebook’s shift will solve the problem of so-called filter bubbles, in which people only see information that aligns with their existing beliefs. Some raised the possibility that crowd sourcing the list of credible news outlets could be manipulated.

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For its part, Twitter minimized the impact of the Russian-linked accounts, saying that they merely represented “two one-hundredths of a percent (0.016%) of the total accounts on Twitter at the time.”

“However, any such activity represents a challenge to democratic societies everywhere, and we’re committed to continuing to work on this important issue,” Twitter said.

Twitter has said that it had discovered 3,814 IRA-connected accounts in total, including 1,062 accounts that it uncovered just recently. It said it had also identified 50,258 bot accounts linked to the Russian government that spread misinformation during the 2016 election, including 13,512 accounts found just recently.

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China targets cryptocurrencies in online pyramid scheme crackdown

(Reuters) – China will crack down on online pyramid schemes, including speculation masked as cryptocurrencies and online games, the public security ministry said on Friday.

The ministry will act jointly with the industrial and commercial department to stamp out pyramid-type schemes, besides punishing those who swindle students and vulnerable groups, the ministry said in a statement on its website.

Chinese regulators have moved to rein in financial risks associated with virtual currency trades and pyramid schemes.

A court this month sentenced two people to life imprisonment for fraud in a pyramid scheme involving 15.6 billion yuan (1.75 billion pounds) that sucked in more than 200,000 people.

Reporting by Hong Kong newsroom; Editing by Clarence Fernandez

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Tasty One Top Review:

My test kitchen tends to be a pretty happy place to work. Case in point? I got to make fried chicken the other day. For it, I put the bird parts in a salty buttermilk bath for the afternoon, then cooked them using the brand new One Top from Tasty. I’d tell you more about that first batch of chicken, but in the frenzy, my notes were obliterated by hot sauce and the grease on my fingers.

The One Top is an induction burner—one of a class of kitchen devices that heats a pan not with a flame or other heating element, but by generating a magnetic field. As smart induction burners like the Hestan Cue and the Breville/PolyScience Control Freak demonstrated, this is a category with exciting potential. Instead being plagued by the vagaries of burner settings like medium-low and high, which are different from stove to stove, an induction burner can be dialed to the exact temperature of your choosing.

Tasty’s induction burner connects with the Tasty app and, using a sensor on the burner or a probe in your pot, allows you to set and hold the temperature of the surface of the pot or the liquid inside it. For something like frying, which I don’t do that often, I liked how it took a lot of guesswork out of the process. The app guided me through the recipe, controlling the burner temperature and maintaining it if it needed to wait for me to finish one step before starting the next.

Tasty’s 1,500-watt One Top and Breville’s 1,800-watt Control Freak have little temperature-sensing nubbins that poke up from the center of the burner. They also have probe sensors that mount on the side of the pan, allowing control over the temperature of the liquid inside, meaning it will hold the temperature or work to get back to it, allowing you to do things like deep fry crab cakes or cook ribs sous vide. The probe can also be used to monitor internal temperatures of cuts of meat. The 1,600-watt Hestan does this kind of work with sensors built right into its pan.

Brand New

The One Top is made by Tasty, which is owned by BuzzFeed. Who can say what a media outlet is doing creating hardware, but maybe it’s just that Tasty racks up views for its food videos by the billion and the company wants to take advantage of its already captive audience. Those videos are smart and, apart from the odd recipe like the croquembouche that looks like a prop from a Matthew Barney installation, they’re fun to the point of mesmerizing to watch. The One Top is also significantly less expensive than its competitors; while the professional-grade Control Freak costs $1,800 and the Hestan—which comes with a nice pan—costs $500, the One Top is only $150. (Tasty also offers an embarrassingly cheap-looking pan set with the One Top for an additional $35 when you buy the burner. Avoid.)


For the time being, there’s a surprisingly small amount of recipes available—23 dedicated One Top recipes and 40 more that have been adapted from Tasty’s archives. This being a Tasty product, some of these are for recipes like Fancy Cheese Fondue and Caramel French Toast. Also, for no discernible reason, the One Top is pentagram-shaped when seen from above.

More peculiar was how the review models for the press were being sent out a month after Tasty’s mid-December ship date to the public. It reminded me of movies like Geostorm that have no advance screenings for critics because the studio knows they’re going to be duds. Needless to say, WIRED bought one and I have been using it for the last month.

The thing I haven’t yet mentioned about that heavenly fried chicken is that the recipe calls to cook the chicken four pieces at a time, as each piece of cold chicken drops the temperature of the fry oil significantly. That means you do it in batches, so plan on babysitting the machine for a good hour and a half between the initial preheat, first batch, reheating, and second batch; It’s a bit of a stretch.

Basic Training

I often gripe about how many connected products in the culinary universe feature exotic sounding recipes yet neglect the basics, selling you on piperade without showing you how to make eggs. Instead, at least for now, most of the One Top recipes are basics: steak, chicken breast, and pasta sauce. The egg options are poached, fried and scrambled. Many manufacturers of new connected kitchen gadgets forget to teach their users to walk before they can run—a key to long-term product use—and commendably, in these early days the One Top’s recipes focus on easier starter dishes.

The One Top recipe for scrambled eggs, for instance, breaks no new ground, but that’s not the point. Instead, the app sets the pan to a nice, low 240 degrees Fahrenheit for you, and little videos show you how to drag the curds across the pan as they begin to set. When it works like this, entering Tasty’s universe means you’re essentially forced to learn good technique. There’s a lot of pan flashing in the smart kitchen, but this combination of making better food and creating more skilled home cooks is the true grail of the realm.

Before I could get too excited about the One Top’s potential, I tried its recipe for a New York strip steak. I really like that the app communicates with the burner, essentially forcing you to wait until a pan is hot before putting the steak on it, then setting a timer and instructing you to leave it undisturbed until it goes off, which should ensure a nice, dark sear on the steak like they show on the app. Unfortunately, my results were nowhere near as good; when the timer went off, my $20 Oregon-raised beef cut had started to brown in the middle, but both ends were still gray, making it look like the three-paneled flag of Wimpy Searistan, the saddest country in the steak world. I ended up propping one end of the steak up on the lip of the pan to brown the other over the hotter center of the pan. Since the One Top’s probe was still waiting for the steak to come up to my requested medium rare internal temperature, I was able to nudge it across the finish line and still have a pretty nicely seared steak.

Zone Offense

The next day, I tested a theory. I put the skillet (a cast iron pan the same size as the one suggested in the recipe) back on the One top, turned the heat to medium, and set a weighed-down circle of parchment paper on the pan’s surface, and only the center five to six inches of the paper turned brown. To be sure it wasn’t a pan defect, I did the same thing with a smaller skillet, offsetting it so that the edge was over the center of the burner. Sure enough, I ended up with a moon-like crescent on my parchment.

While the top of the burner is 10 and 3/4 inches across, a Tasty spokesperson told me that the heating coil is only seven inches in diameter, saying the “bottom of many pots and pans sold in the US are approximately this size” and that they “rely on the conductivity of the metal in larger pots and pans to evenly distribute heat.”


Sigh. Yes, given time, some of that heat will travel outward on the right pan, but the One Top isn’t really marketing itself toward the heat-diffusing copper pot crowd. Ideally, you want to match the burner size with the pan size for even heating. I used a cast-iron skillet the size the recipe the Tasty app suggested, put the steak on when prompted, and had disappointing results.

I cold-called my local Albert Lee appliance store, asked to speak with someone about induction, and queried how I’d do with a large skillet on a seven-inch induction coil. The man on the line did his best to stay diplomatic, saying the coil would distribute the heat to the area of the skillet beyond the reach of the element, “to an extent, but that’s double the area of the element. You’re not going to get even heat out to the edge.”

Later, I reran the steak recipe, with the app working to bring my pan up to 390-degree target temperature. I used an infrared thermometer to measure the center and four spots an inch in from the sidewall when it prompted me to add the steak; the center read 520 degrees (the overshoot is not a big deal), while three of the spots toward the edge measured about 250 degrees and the fourth was at 300. I let the One Top hold the empty pan at temperature for ten minutes, measured again, and this time the temperatures around the edge were still unimpressively far from the target temperature: 252, 290, 340, and 285 degrees.

I’ll also point out that many of the existing recipes in the One Top section of the Tasty app request pans of this size in the equipment list.

While the Hestan Cue’s coil is almost exactly the same size, it has you cook its recipes with its own pan which has a base that’s only 7.5 inches wide. A skillet like the ones suggested in the One Top recipes are about 12 inches wide have bottoms that are about 9.5 inches wide, leaving a lot of extra area around the outside that’s not on top of the heating coil.

Grilled Beeps

The app and burner can also be slightly buggy or just plain confusing. The second time I made fried chicken, the burner LEDs started blinking in the middle of a batch and clearly something was wrong, because the temperature started plummeting. Reading the FAQs later, I learned that this is a safety feature that kicks in if the cooktop is above 214 degrees Fahrenheit for more than 45 minutes; you just press the plus button on the One Top and keep cooking. The error or an explanation it wasn’t communicated to the app, though, which meant I finished the chicken on my home stovetop. Also, just like my quickly-returned microwave, Sparky III, my One Top buzzed whenever it was plugged in.

While the portability of burners like the One Top, Hestan Cue, and Control Freak is appealing, unless you want your smoke detector to start squawking, the place you’ll most want to put them is on your stove, right under your vent hood. I have an induction range at home and I had the One Top cranked up on top of it and at one point, every light on my stove started blinking, perhaps due to some magnetic interference. Set on top of a gas range, the whole setup can get the wobbles. Eventually, I’d love to see the more advanced capabilities of these portable burners built right in to our home stoves.

First Heat

Despite these non-negligible faults, the One Top has tantalizing features, many of the bugs will likely be ironed out with software updates, and perhaps some of the recipes will be refined. While its list of One-Top ready recipes is surprisingly small, Tasty has more than 1,700 recipes and videos in its library. It’s a safe bet that the team will get as many of those as possible adapted to the new machine. It’s exciting to think the company could leverage its monster fan base and get more people into the idea of precision cooking.

I’d much prefer having more manual controls on the base, particularly to dial in the temperature for a manual cook without needing a phone as an interface. That said, the basic functionality of the app is impressive. Demo videos accompany steps, and you can pop out of a step to look at a recipe as a whole, then pop back in. I like that the steps tell you what temperature you’re cooking at, which are great numbers to internalize when you take off the training wheels and start winging it in manual mode.

The One Top is far from perfect, but it’s not the Geostorm of the kitchen. It’s surprising that the app launched with so few recipes, but once Tasty rolls out a more complete set and combines that with a few billion mesmerized viewers, the device has some serious potential.

Food writer Joe Ray (@joe_diner) is a Lowell Thomas Travel Journalist of The Year, a restaurant critic, and author of “Sea and Smoke” with chef Blaine Wetzel.

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