Netflix failed to deliver last quarter and was raked over the coals by Wall Street.
Now the streaming juggernaut has a chance to show that its most recent results might have just been a blip.
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Netflix (NFLX) has yet to recover from its stock slide in July, when the company reported that it added about 1 million fewer subscribers than it expected in the second quarter.
The company is huge — Netflix had about about 130 million total subscribers when it last reported results, dwarfing competitors such as Hulu, which said it had around 20 million subscribers this spring. (WarnerMedia, the parent company of CNN, owns 10% of Hulu.)
And while the most recent numbers — Netflix added 5.2 million subscribers overall — would have looked very impressive to just about any other media company trying to build a streaming service, it wasn't enough for investors who demand a dominant performance from the leader of the pack.
Netflix shares are still down about 20% compared to what they were trading at in mid-July. A big tech sell-off last week didn't help matters, either.
Wall Street is expecting Netflix to report more modest growth when it releases its third-quarter results Tuesday afternoon. Analysts at the research firms Cowen and Imperial Capital both estimate the company will say it has added just shy of 5 million subscribers.
Those muted numbers aren't necessarily a bad thing. The two firms expect Netflix to say the vast majority of new members are coming from outside the US. That would be a big positive for a company that is making an aggressive push for a global audience.
David Miller, managing director at Imperial Capital, wrote last week that Netflix has "strong traction" in Europe and "continued uplift" in Australia and New Zealand. His price target for the company is $494 per share.
India is another promising place for growth, and Netflix has invested heavily in the country. "Sacred Games," the company's first original Indian series, was a "great success" when it debuted there this summer, Chief Content Officer Ted Sarandos said during the last earnings presentation.
Cowen analysts, meanwhile, are pointing to Netflix's outsized success compared to its competition as a reason to stay optimistic.
Last week, the firm released a new survey that showed Netflix was the top platform used by customers to view video content on their TVs. The streaming service beat out basic cable, broadcast and a host of other streamers. Cowen raised its price target for Netflix from $349 to $400.
Even with its momentum and size, there are headwinds Netflix will have to overcome if it hopes to stay king of streaming.
Streaming media is becoming increasingly competitive. First, there are existing competitors, including Hulu and Amazon's (AMZN) Prime Video.
But a bevy of other challengers are on the horizon. WarnerMedia, the division of AT&T (T) that includes HBO, Turner and Warner Bros, just announced last week that it is launching a new streaming service next year. Walmart (WMT) is beefing up its free, ad-driven service Vudu through MGM and other partners. And Apple (AAPL) is inking deals for original content, though details of its ultimate plan are still elusive.
Then there is what is probably the most anticipated service of them all: Disney's yet-to-be-named streaming service, which is expected to debut late next year.
Disney (DIS) has already said it will pull content from Netflix ahead of that launch. The company is also close to finishing its acquisition of most of 21st Century Fox, which will give it an even larger library of popular films and shows. That deal also will give Disney a majority stake in Hulu, further increasing the company's influence in streaming.
If Netflix wants to fight off those competitors, it will likely need to spend a lot of money on creating more of its own original programming. And it's already building that library — earlier this year, Chief Financial Officer David Wells said the company expects to have about 700 programs available for customers by the end of this year.
Analysts at Cowen expect the company will spend about $13 billion on its productions this year. That's $5 billion more than the company estimated going into 2018.