Netflix $NFLX raised subs rates days before the ER. It reports tomorrow. $NFLX, Netflix, Inc. / H1 What's the ER going to look like? User chinnick967 writes:Netflix is banking on International subscribers this quarter for their record-breaking subscriber growth guidance from Q3, and they are certain to miss. Netflix’s top four international traffic metrics grew an average of about 13%. With about 78 million international subscribers last quarter, if EVERY SINGLE international visitor subscribed they would increase their subscriber count by 10.14 million international subscribers. This is also bearing in mind that this growth is only between November - December, and November was a down (and lowest) month while December was their peak month of the quarter — so their actual traffic growth for the quarter is even less than that. We also have to remember that Netflix offers a one-month free trial, so even the December peak will not make a huge impact since those are not paid accounts yet. Right now they are guided for 6.1 million new paid international subscribers this quarter. That means about 60% of ALL visitors would have to be new subscriptions. With an average site time of just over 2 minutes, we know that less than half of the new visitors are not creating new accounts — and a generous number would be 10% - 20% of new visitors are signing up. This would mean at 20%, their subscriber growth for their ONLY growth month this quarter would have been around 2.028 million new international subscriptions — while they likely lost subscriptions in November and were stagnant in October. With the same math being applied for US subscriptions, a generous growth rate from November - December would have been 585 thousand subscribers. They also got a lot of web traffic from being linked to as a result of Bird Box, so their traffic numbers are propped higher with a higher-than-average bounce rate. They are going to have a HUGE miss on guided subscription growth, largely due to a over-the-top estimate on international subscribers. They will miss on both domestic and international subscriptions. Beyond that, they are going to guide down in their guidance because of increased competition, investment into original content, and less-than-expected international growth. On top of all this, due to the recent prop-up of the stock we can expect a high volatility drop-off on a miss. We can expect to see Netflix drop into the $250 - $300 range on earnings easily. Additional Notes: - They guided that their operating margin would decrease from 12% to 4.9% this quarter, but their huge investment into original content shows that this is very unlikely. - Netflix has had a consistent negative cash flow, and that is expected to grow vastly this quarter -- once again due to investments into original content. - The Price Hike ahead of earnings is bearish, as they would have waited for ER to announce it if they expected ER to be Bullish. It is likely being used to buffer guidance due to lower-than-expected subscriber growth. The same practice is used when companies increase dividends ahead of earnings.Netflix will close higher AMC on Thursday? This poll is open until Friday morning to account for after-market close action.Agree - Netflix goes up after earnings.Disagree - Netflix falls after earnings.