Netflix subscriber growth faces test after rally

Netflix will get a chance this week to validate the $46 billion added to its market value since the company’s blowout earnings report in April.

The main question hanging over Netflix’s second-quarter results — much like the first — is whether the company can add enough streaming subscribers to satisfy investors, whose bullish bets have made the stock the second-best performer in the S&P 500 Index this year.

Netflix silenced critics in the first quarter, adding almost 1 million more subscribers than analysts projected. But analysts have made that task more difficult in recent months by raising subscriber estimates, even as some question the stock’s valuation.

“It’s possible expectations have gotten ahead of themselves,” Macquarie analyst Tim Nollen said in a research note ahead of the results. “It may take a solid beat to keep the stock momentum going.”

Nollen has the equivalent of a buy rating on the stock and said he’s not going against Netflix, even though “expectations are sky-high” heading into Monday afternoon’s report.

Growth is critical for the television- and movie-streaming company, whose success in adding subscribers has fueled a surge in market value that now exceeds Walt Disney Co. by almost $19 billion. So far Netflix has proved it can keep finding new customers who are willing to pay as much as $13.99 a month in the United States to watch original shows like

Stranger Things and 13 Reasons Why.

Wall Street is looking for second-quarter total subscriber net additions of 1.22 million in the United States and 5.08 million internationally, according to the average of five estimates compiled by Bloomberg News. That compares with Netflix’s forecast of 1.2 million domestically and 5 million globally on April 16.

The company will also give its outlook for the third quarter. Analysts expect total net subscriber additions of 833,000 in the United States and 4.75 million for international, according to the average of four estimates.

All of this growth has come at great expense as the company continues to invest in programming. Netflix said last quarter that it plans to spend as much as $8 billion on content in 2018.

Most of Wall Street has endorsed Netflix’s growth formula.