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Piper Jaffray's Olson Says Netflix's Earnings Will Be 'More OK Than Great'

Will Netflix's Earnings Be 'More OK Than Great'?|Piper Jaffray|NASDAQ:NFLX

Netflix, Inc. NFLX 1.23% is scheduled to report its third-quarter results after Monday's closing bell, which are expected to be "more OK than great," at least according to Piper Jaffray's Michael Olson.

Speaking as a guest on CNBC's "Squawk Alley" segment, Olson said the last few quarters have been "rough" for Netflix, but Monday's report could show an improvement in trends.

Olson explained there have been several media and analyst reports that suggested Netflix's domestic net additions will fall short of the company's own guidance of 300,000 net adds. While this theory might prove to play out, Netflix could benefit from the "expectations game" at a time when investor expectation is already low.

"There has been so much talk about them missing the domestic net sub add number that I think it's unlikely that a slight miss there would have any real impact on the stock assuming international stays strong," Olson said.

Olson continued that investors are expecting incremental transparency from Netflix in terms of spending on content. Nevertheless, the streaming video segment is a growing market; there is a leader in the space, and that leader is Netflix.

Olson also pointed out that Netflix's library of video is shrinking, but the company is only dropping its "lower tiered content" and keeping "quality content that is bringing in viewers."

"Ultimately this is the right strategy," the analyst concluded. "You want to have a unique offering and that is the way to do it."

At last check, Netflix was down 1.49 percent at $99.96.

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DateFirmActionFromTo
Oct 2016Deutsche BankInitiates Coverage onSell
Oct 2016Loop CapitalInitiates Coverage onBuy
Oct 2016Loop CapitalInitiates Coverage onBuy

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