Netflix (NASDAQ:NFLX): For Netflix, earnings season is often predicated on whether membership growth met or exceeded expectations. The company guided an additional 5.2 million members during the quarter; 1.45 million in the U.S. and 3.75 million internationally. This compares favorably to the FactSet forecast of 1.44 million new domestic subscriptions and 3.73 internationally. This breaks down to about $1.4 billion in revenue from domestic streaming, almost $1 billion in international streaming and a meager $130 million from DVD shipping business.
To increase growth and appeal to wider audience, Netflix continues to introduce new original programming. Its most recent series, the Crown, took home a number of awards at this year’s Golden Globes, the most notable being “Best Drama TV Series”. The company plans to increase its hours of original programming to 1,000 in 2017, but this comes at a cost. As content costs continue to rise ($6 billion this year), it won’t be surprising to see a another price hike implemented.
Meanwhile, Netflix faces additional pressure from Amazon’s recent push to expand its offerings and original content. Apple (NASDAQ:AAPL) also announced it would launch original TV shows to challenge Netflix and Amazon’s dominance. It was previously rumored that Apple might be in the market to purchase Netflix and that could very well still be true if its new efforts fall flat. Netflix is likely to be at the center of takeover rumors this year regardless of financial performance.
Goldman Sachs (NYSE:GS): Being an investment bank, the volatility created after the election bodes well for Goldman Sachs trading business. Equity sales should see the biggest upside from the volatile environment while general market improvements advances fixed income and currency revenue. Meanwhile M&A activity and debt underwriting made a significant jump in 2016 that will support top line expansion.
The stars seem aligned for the banking giant’s upcoming report but any sign of weakness will undoubtedly push shares lower. Goldman’s vast exposure to international markets makes it prone to currency headwinds and macroeconomic uncertainty, especially in Europe.
Citigroup (NYSE:C): Trading revenue will again be an area of focus in the upcoming report. During the third quarter revenue from fixed income, currencies and commodities rose 35% while equity trading fell by 34% to $788 million. Overall trading revenue grew 16% to 4.1 billion on improving market conditions. Citi found additional support from rebounding oil prices and a 5% decline in loan loss reserve . A bulk of this quarter’s result will be predicated on the performance of these businesses.
Like most of its peers, the combination of weak FX translation and economic uncertainty poses a legitimate threat to performance.