Netflix earnings: What to expect

Netflix has been on a roll when it comes to big groundbreaking announcements that show its growing reach and power to grab subscribers and disrupt the entertainment biz.

On Monday it signed a deal for rights to CBS and Showtime content for its European expansion, two weeks ago it agreed to partner with Adam Sandler to produce and star in four new feature films that will appear exclusively on Netflix and it announced a groundbreaking deal with the Weinstein Co. to release the sequel to "Crouching Tiger, Hidden Dragon" on Netflix the same day it hits Imax theaters.

Now with earnings due out Wednesday afternoon the focus shifts to Netflix's numbers: How do all of its bold moves with content translate to subscriber gains? How are all these investments in content weighing on margins?

Analysts expect revenue to grow 27 percent this quarter to $1.409 billion—higher than the $1.22 billion Netflix itself forecast. Analysts also are expecting earnings per share to grow faster than the 89 cents Netflix forecast; analyst consensus is 93 cents.

But with Netflix the real focus is on subscriber growth—the company forecast the addition of 3.69 million streaming subscribers between the U.S. and overseas for a total of 53.74 million worldwide.

Netflix's results come as one of the company's skeptics, BTIG analyst Rich Greenfield, has done a total 180 on the company, upgrading his rating on Netflix to "buy," projecting the company will reach 100 million subscribers by 2017. Greenfield says his downgrade of the stock to "neutral" in September of last year was "clearly a mistake"—the stock is up 45 percent since then.

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"As you start to see cracks in the multichannel model for television and as you see the ad market unexplainably weak along with ratings unexplainably weak, everybody seems to be forced to embrace selling new and better content to Netflix," said Greenfield. "Showtime's 'Ray Donovan' licensed to Netflix in Europe—some of the highest-quality content is flowing to Netflix. It's a reversal of when they'd sell their worst stuff to Netflix—now everyone is begging Netflix to take their best stuff."

Greenfield said all of Netflix's new content deals is "playing into Netflix's long-term strategy: great content begets more long-term subscribers. The company is teaching a whole generation of consumers to love binge viewing without ads."

Greenfield isn't the only one growing more bullish: Barclays just raised its price target on Netflix 14 percent to $480, upgrading the stock from "underweight" to "equal weight." Analyst Paul Vogel says now he's laser focused on Netflix's success—penetration rates—in France and Germany saying "the crux of NFLX's current valuation rests on the success of their product there."

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Cowen also just raised its price target to $461, boosting its projections of international streaming subscribers for the fourth quarter. And Suntrust just initiated with a $525 price target, and a "neutral" rating. Analyst Robert Peck's concerns, "We suspect international profitability may be slower to turn up as the company invests in content and brand."

On the company's video earnings call—an innovative format where Wall Street analysts moderate with questions emailed and tweeted in—a couple of key topics are expected to dominate. How fast does Netflix plan to continue to expand Internationally and how's the recent European expansion going so far? Why the recent focus on original movies? And how much more does Netflix plan to invest in originals—and is it paying off?