Analysts Expect Netflix’s First Quarter Earnings Report to be Mixed

Netflix will soon report its first quarter 2017 earnings report, and some observers say the report will likely be a mixed bag. Stock market analysts expect Netflix to report a 147% jump in earnings from last quarter, with earnings of 37 cents per share. Last year, Netflix reported earnings of 6 cents a share in the first quarter – meaning Netflix’s earnings have risen nearly 600%.

Netflix is also expected to report $2.64 billion in earnings this quarter, up 35% from last year. That figure is a combination of $1.48 billion from Netflix’s American streaming revenue, $1.05 billion from international streaming subscriptions, and another $121 million from the somehow-still-active domestic DVD shipping subscriptions.

However, those rosy earnings don’t tell the full picture of the current state of Netflix’s finances, and some investors are passing on the streaming service. Wedbush analyst Michael Pachter told MarketWatch that the astronomical budgets of Netflix’s original content and other projects mean the company won’t exactly start turning an actual profit for some time:

We continue to believe that Netflix cash burn is important and is largely overlooked by investors. As the cost of content continues to be bid up, we expect Netflix to continue to burn cash to fund its acquisition of original and exclusive content. We don’t expect Netflix to become meaningfully profitable on a cash basis for several years, and we don’t expect positive free cash flow for the remainder of this decade

Those worries are certainly nothing new. Netflix’s spending has been a topic of concern for investors and subscribers alike for years. Netflix currently boasts close to 90 million subscribers and rising in the U.S., but their rate of growth is declining and their subscriber total will eventually hit a ceiling once subscriptions fully saturate the streaming market. Furthermore, Netflix is currently facing stiff competition from other streaming services such as Amazon Prime, Hulu, and Twitter. Even traditional cable and broadcast television networks are eyeing the streaming market, meaning Netflix will likely have to keep up their lavish spending to stay ahead of the curve for some time.