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Netflix (NFLX - Free Report) reported robust second-quarter 2024 results after the closing bell on Thursday. The world's largest video-streaming company topped both earnings and revenue estimates and delivered strong subscriber growth. However, shares of Netflix initially dropped 3% in after-market hours following the earnings but later recovered to close 1% higher.
Investors could tap the opportune moment through ETFs with the largest allocation to this streaming giant. These funds include MicroSectors FANG+ ETN (FNGS - Free Report) , Invesco Next Gen Media and Gaming ETF (GGME - Free Report) ), First Trust Dow Jones Internet Index Fund (FDN - Free Report) , Pacer BioThreat Strategy ETF (VIRS - Free Report) and First Trust S-Network Streaming & Gaming ETF (BNGE - Free Report) .
Q2 Earnings in Detail
The company reported earnings per share of $4.88, which outpaced the Zacks Consensus Estimate of $4.70 and improved from the year-ago earnings of $3.29. Revenues rose 17% year over year to $9.56 billion and were above the consensus estimate of $9.53 billion.
The streaming giant added 8.05 million subscribers in the second quarter, marking a 37% increase from the year-ago quarter and taking the global membership to 277.6 million subscribers. Subscriber growth was driven by the crackdown on password sharing (blocking subscribers from lending their accounts to friends and family) and the popularity of series like BridgertonS3, Baby Reindeer, Queen of Tears and The Great Indian Kapil Show and films like UnderParis, Atlas and Hit Man and The Roast of Tom Brady, which drew immense investors' interest during the quarter.
Going forward, Netflix sees its biggest opportunity to capture a larger portion of more than 80% of TV time — encompassing both traditional broadcast and modern streaming formats — that is currently not dominated by Netflix or YouTube (read: Tough Time Ahead of Nasdaq & Semiconductor ETFs?).
The streaming giant expects revenues to grow 13.9% year over year to $9.73 billion and earnings per share of $5.10 for the third quarter. The Zacks Consensus Estimate is pegged at $9.70 billion for revenues and $4.70 for earnings per share. Netflix expects fewer subscriber additions in the third quarter compared to the last year. For the full year, revenues are expected to grow 14-15% year over year compared with the previous projection of 13-15%.
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar-weighted index. It is designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in its basket in equal proportion, with Netflix’s share coming in at 10% (read: 5 Large-Cap ETFs at the Forefront of the Market Rally This Year).
MicroSectors FANG+ ETN has accumulated $384.1 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 131,000 shares a day on average and has a Zacks ETF Rank #3 (Hold).
Invesco Next Gen Media and Gaming ETF offers exposure to companies with significant exposure to technologies or products that contribute to future media through direct revenues. It tracks the STOXX World AC NexGen Media Index, holding 89 stocks in its basket. Netflix is the third firm, accounting for 7.7% of GGME assets.
Invesco Next Gen Media and Gaming ETF has amassed $39.4 million in its asset base and charges 60 bps in annual fees. It trades in an average daily volume of around 5,000 shares and has a Zacks ETF Rank #3.
First Trust Dow Jones Internet Index Fund (FDN - Free Report)
First Trust Dow Jones Internet Index Fund follows the Dow Jones Internet Composite Index, giving investors exposure to the broad Internet industry. It holds about 41 stocks in its basket, with Netflix occupying the third spot at 6.3%.
First Trust Dow Jones Internet Index Fund is the most popular and liquid ETF in the broad technology space, with AUM of $6 billion and an average daily volume of around 297,000 shares. FDN charges 51 bps in fees per year and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.
Pacer BioThreat Strategy ETF seeks exposure to U.S. companies that provide their goods and services to the market by accomplishing one or more of the seven index themes. It tracks the LifeSci BioThreat Strategy Index, holding 56 stocks in its basket. Netflix occupies the eighth position with 4.6% of the assets.
Pacer BioThreat Strategy ETF has accumulated $3.7 million in its asset base and charges 70 bps in annual fees. It trades in a meager average daily volume of 100 shares and has a Zacks ETF Rank #3.
First Trust S-Network Streaming & Gaming ETF tracks the S-Network Streaming & Gaming Index and holds 45 stocks in its basket. Netflix takes the seventh spot, accounting for 4.4% of the assets. From a sector look, entertainment takes the largest share at 42.5%, while hotels, restaurants & leisure, semiconductors & semiconductor equipment, and interactive media & services round off the next three spots with double-digit exposure each.
First Trust S-Network Streaming & Gaming ETF has accumulated $5.3 million in its asset base and trades in an average daily volume of under 1,000 shares. It charges 70 bps in annual fees.
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Netflix ETFs to Buy on Robust Q2 Earnings
Netflix (NFLX - Free Report) reported robust second-quarter 2024 results after the closing bell on Thursday. The world's largest video-streaming company topped both earnings and revenue estimates and delivered strong subscriber growth. However, shares of Netflix initially dropped 3% in after-market hours following the earnings but later recovered to close 1% higher.
Investors could tap the opportune moment through ETFs with the largest allocation to this streaming giant. These funds include MicroSectors FANG+ ETN (FNGS - Free Report) , Invesco Next Gen Media and Gaming ETF (GGME - Free Report) ), First Trust Dow Jones Internet Index Fund (FDN - Free Report) , Pacer BioThreat Strategy ETF (VIRS - Free Report) and First Trust S-Network Streaming & Gaming ETF (BNGE - Free Report) .
Q2 Earnings in Detail
The company reported earnings per share of $4.88, which outpaced the Zacks Consensus Estimate of $4.70 and improved from the year-ago earnings of $3.29. Revenues rose 17% year over year to $9.56 billion and were above the consensus estimate of $9.53 billion.
The streaming giant added 8.05 million subscribers in the second quarter, marking a 37% increase from the year-ago quarter and taking the global membership to 277.6 million subscribers. Subscriber growth was driven by the crackdown on password sharing (blocking subscribers from lending their accounts to friends and family) and the popularity of series like BridgertonS3, Baby Reindeer, Queen of Tears and The Great Indian Kapil Show and films like UnderParis, Atlas and Hit Man and The Roast of Tom Brady, which drew immense investors' interest during the quarter.
Going forward, Netflix sees its biggest opportunity to capture a larger portion of more than 80% of TV time — encompassing both traditional broadcast and modern streaming formats — that is currently not dominated by Netflix or YouTube (read: Tough Time Ahead of Nasdaq & Semiconductor ETFs?).
The streaming giant expects revenues to grow 13.9% year over year to $9.73 billion and earnings per share of $5.10 for the third quarter. The Zacks Consensus Estimate is pegged at $9.70 billion for revenues and $4.70 for earnings per share. Netflix expects fewer subscriber additions in the third quarter compared to the last year. For the full year, revenues are expected to grow 14-15% year over year compared with the previous projection of 13-15%.
ETFs in Focus
MicroSectors FANG+ ETN (FNGS - Free Report)
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar-weighted index. It is designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in its basket in equal proportion, with Netflix’s share coming in at 10% (read: 5 Large-Cap ETFs at the Forefront of the Market Rally This Year).
MicroSectors FANG+ ETN has accumulated $384.1 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 131,000 shares a day on average and has a Zacks ETF Rank #3 (Hold).
Invesco Next Gen Media and Gaming ETF (GGME - Free Report)
Invesco Next Gen Media and Gaming ETF offers exposure to companies with significant exposure to technologies or products that contribute to future media through direct revenues. It tracks the STOXX World AC NexGen Media Index, holding 89 stocks in its basket. Netflix is the third firm, accounting for 7.7% of GGME assets.
Invesco Next Gen Media and Gaming ETF has amassed $39.4 million in its asset base and charges 60 bps in annual fees. It trades in an average daily volume of around 5,000 shares and has a Zacks ETF Rank #3.
First Trust Dow Jones Internet Index Fund (FDN - Free Report)
First Trust Dow Jones Internet Index Fund follows the Dow Jones Internet Composite Index, giving investors exposure to the broad Internet industry. It holds about 41 stocks in its basket, with Netflix occupying the third spot at 6.3%.
First Trust Dow Jones Internet Index Fund is the most popular and liquid ETF in the broad technology space, with AUM of $6 billion and an average daily volume of around 297,000 shares. FDN charges 51 bps in fees per year and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.
Pacer BioThreat Strategy ETF (VIRS - Free Report)
Pacer BioThreat Strategy ETF seeks exposure to U.S. companies that provide their goods and services to the market by accomplishing one or more of the seven index themes. It tracks the LifeSci BioThreat Strategy Index, holding 56 stocks in its basket. Netflix occupies the eighth position with 4.6% of the assets.
Pacer BioThreat Strategy ETF has accumulated $3.7 million in its asset base and charges 70 bps in annual fees. It trades in a meager average daily volume of 100 shares and has a Zacks ETF Rank #3.
First Trust S-Network Streaming & Gaming ETF (BNGE - Free Report)
First Trust S-Network Streaming & Gaming ETF tracks the S-Network Streaming & Gaming Index and holds 45 stocks in its basket. Netflix takes the seventh spot, accounting for 4.4% of the assets. From a sector look, entertainment takes the largest share at 42.5%, while hotels, restaurants & leisure, semiconductors & semiconductor equipment, and interactive media & services round off the next three spots with double-digit exposure each.
First Trust S-Network Streaming & Gaming ETF has accumulated $5.3 million in its asset base and trades in an average daily volume of under 1,000 shares. It charges 70 bps in annual fees.