Netflix earnings are out soon. What Wall Street is really watching

Netflix is set to release earnings after the bell Tuesday, and Wall Street is eager to find out the actual boost the streaming service received from live programming during the holiday quarter. The streamer hosted a couple attention-grabbing events in recent months, including the Jake Paul-Mike Tyson boxing fight and National Football League games on Christmas day. Analysts are focused on whether these popular events accelerated revenue from its ad tier and added more subscribers, and whether Netflix will announce more action on this front. “We think Netflix is positioned to accelerate ad tier revenue contribution for the next several years as it adds more live events, improves its advertising solutions and targeting, and utilizes new partnerships. We expect the ad tier to become the primary revenue growth driver by 2026,” Wedbush analysts said in a note. The firm expects Netflix to have added 10 million net subscribers globally in the fourth quarter. Analysts will also be watching any potential updates on Netflix’s monthly active users, and if it had a sizable jump due to the special events. Netflix’s last earnings report revealed that the company’s ad tier subscriptions served 70 million monthly active users. Offsetting license fees While Netflix is expected to have enjoyed higher engagement because of these events, it needs to see a dual revenue stream of subscriptions and advertising in order to offset the hefty license fees that support this type of programming, according to Loop Capital’s Alan Gould. “The most interesting changes by NFLX are its evolution into sports and embrace of advertising, which are related,” Gould said in a note to clients. He projected that Netflix will have added 10.5 million subscribers, compared with an increase of 9.8 million, per FactSet consensus. This is expected to be the last time Netflix will report subscriber data to shareholders, as it plans to focus on revenue and other financial metrics as performance indicators. ‘In full swing’ Seaport’s David Joyce said these buzzworthy occasions could lead to more media rights wins down the road, including the right to stream Formula 1 races. “The global fan engagement strategy, now with an ad platform to help monetize the fans in addition to presumably lower churn/higher retention/incremental sign-ups, is in full swing,” Joyce said. He sees a 160% increase in ad revenue to $609 million in the fourth quarter. Still, there could be very few sports rights due for renewal in the next few years for Netflix to obtain. “Investors will remain focused on the firm’s evolving sports strategy. We believe NFLX would benefit from expanding its sports portfolio but note few US sports rights are up for renewal over the next few years,” Citi’s Jason Bazinet said. — CNBC’s Michael Bloom and Sarah Whitten contributed reporting.