What investors want to hear in Netflix's earnings

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When Netflix reports its second quarter results after the market's close Monday the focus will be, as always, on its subscriber numbers.

This will be the first quarter that investors can assess the impact of a price increase for new subscribers. Instead of depressing subscriber numbers, the fact that existing subscribers can lock in their lower prices is expected to reduce user cancellations, also called "churn."

Netflix earnings expectations
Netflix earnings expectations

Original hits like "Orange is the New Black" and "Hemlock Grove" are expected to drive subscriber numbers higher, but the big question is whether Netflix will top 50 million streaming subscribers for the first time.

The company forecasted three months ago that it would add 1.46 million customers to end the quarter with 49.81 million. Investors would like to see CEO Reed Hastings continue his track record of over-delivering on expectations, projecting just a hair above the company's projections.

The company's stock has had a very good ride, up some 65 percent over the past 12 months, and Wall Street analysts expect more good news. Analysts polled by Thomson Reuters expect the company to report a 25 percent jump in revenue to $1.334 billion, while earnings per share are expected to more than double from 49 cents a year ago to $1.16.

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Going forward, Wall Street expects the company to project ongoing 25 percent revenue growth and earnings growth, and for earnings-per-share to decline in the quarter ending in September.

Expansion plans will also be in focus, as investors are hoping to hear updates on plans in Europe, including the timing of launches in France and Germany. The company has said it plans to nearly triple its footprint of European broadband homes.

MKM Partners analyst Rob Sanderson writes: "We have growing conviction that Netflix will become a $70-$80 billion market cap in the coming 4-5 years driven by 1) strength of the content story, 2) domestic penetration growing to 60% of broadband homes and 3) major contribution from massive international opportunity."

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But international expansion brings higher costs, as does ongoing investment in content—both original and exclusively licensed content. Investors want to see that ongoing investment continue to pay off.

Even with "Orange Is the New Black" and "House of Cards," Netflix still lags HBO in terms of original programming, Richard Greenfield, media and technology analyst at BTIG, said on CNBC's "Squawk Box."

"HBO still has this incredible original programming that Netflix is striving to get it," he said.

The value of HBO versus Netflix has gotten a lot of attention recently, after last week's news that Time Warner, which owns HBO, had rejected an $80 billion buyout offer from Rupert Murdoch's 21st Century Fox.

Based on that offer of $85 a share in cash and stock, HBO is valued around $20 billion compared with the $26 billion market-cap of Netflix. "It seems absurd. Either HBO is notably undervalued inside Time Warner … or Netflix is overvalued," Greenfield said. "It's hard to believe that HBO would be that significantly disadvantaged versus Netflix."

—By CNBC's Julia Boorstin and Matthew J. Belvedere