Should You Buy Netflix Stock Before Its Earnings Report After Hours Today?

Netflix, the entertainment giant known for disrupting the industry, finds itself struggling lately. Its stock has plummeted 26% year-to-date, lagging behind the broader market's growth. The company's acquisition plans for Warner Bros Discovery fell through, falling to Paramount Skydance, now Skydance. Investors are concerned about Netflix's loss of market share to YouTube, which has surged ahead, as well as weak engagement trends and low original content this year.

Despite this, Netflix claims its new direction focuses on high-impact investments like live sports that yield similar engagement but attract new subscribers.

Recently, Netflix announced plans to lay off 6% of staff and replace Chief Content Officer Bela Bajaria with Peter Rice, who has a history of developing successful shows and films. The company anticipates revenue growth of 11.7% to $12.86 billion in the current quarter, and earnings per share rising from $0.59 to $0.82. However, investors are wary of Netflix's trending slower revenue growth over the past few quarters, as well as its historically weak engagement growth.

Management expects a turnaround, with a focus on restructuring the narrative around engagement and original programming, a process that may take time, especially given Bajaria's departure.

Netflix's global subscriber base gives it a competitive edge, giving it the scale to invest in programming that competitors can't match. Though it faces threats from Skydance and Disney, Netflix remains the most positioned streaming service, with most of its revenue coming from outside the U.S. While Netflix may experience a sell-off in the short-term due to current struggles, long-term investors see the current stock price as an attractive buying opportunity, believing the company can overcome these challenges, much like it has in the past.