Netflix Has a Lot to Prove on Monday

Netflix Has a Lot to Prove on Monday

When Netflix reports quarterly results tomorrow afternoon, it won't be a quiet affair. The company that got its start with its signature red mailers is no shrinking violet. The conference call is being staged as an "earnings interview" with CEO Reed Hastings and CFO David Wells discussing results, as BTIG Research analyst Rich Greenfield and CNBC's Julia Boorstin moderate the event.

Netflix had better live up to the hype. The stock has popped fivefold since bottoming out last summer, and expectations are high for the financials that will be revealed a few minutes after the market closes on Monday -- and nearly two hours before the live video earnings call.

The stock hit yet another 52-week high on Thursday, and we're now closing in on the stock's all-time high of $304.79 back in 2011 -- a level that seemed unlikely to be revisited anytime soon after the stock began to tank later that year.

Wall Street sees revenue climbing 21% to $1.07 billion, with profitability more than tripling to $0.40 a share.

Netflix closed out the first quarter with 36.2 million streaming subscribers worldwide, and it's a safe bet that the service's audience has grown substantially in the past three months. Back in April, Netflix's guidance was for its global streaming membership number count to clock in between 36.7 million and 37.95 million. It would be a shock if Netflix landed at the low end of its range. It wouldn't be a surprise if Netflix tops 38 million.

There has been little -- outside of perhaps the late May departure of popular Viacom content -- to push customers out the door. Unlike cable and satellite television companies with their annual increases, Netflix isn't budging from $7.99 a month. The economy has improved. After losing SpongeBob SquarePants, Dora the Explorer, and South Park in the Viacom purge, Netflix has bounced back with even more content.

Jim Cramer has even made a sound argument that Netflix is a stealth housing play.

Then we also get to the original programming push that nabbed Netflix's first-run streaming shows a whopping 14 Emmy nominations last week. Do you really think folks will be quick to nix a $7.99-a-month service that they're actually using, as Netflix streams more than a billion hours of content a month?

Yes, there will be plenty to prove come Monday. Did subscriber growth outpace guidance? Did losses overseas narrow to the point where Netflix can point to a period of profitability outside the U.S.? Can its declining DVD business stabilize?

There will be plenty of questions that a buoyant share price requires be answered correctly. This will be an interesting "earnings interview" indeed.

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Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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