Analyst Estimates
Metrics Such as Subscriber Numbers
Move Stocks. Here’s How to Track Them
By DAVID TUNG
WHEN ANALYSTS BUILD earnings models for a company, they
typically include forecasts for particular business lines, products,
and regions—metrics that often determine a company’s bottom
line and stock performance.
These data points tell the story of what’s happening at a
company. To track them, you can use the Analyst Estimates and
Models (MODL) function. MODL lets buy-side users see consen-
sus numbers and request entitlement to view and download the
models of specific sell-side analysts.
Let’s take a look at some info you can glean from MODL.
Key Drivers
Netflix Inc. shares plunged as much as 11% shortly after the market
opened on July 18, ending the day down 10.3%.
What caused that drop? Subscriber numbers. The streaming
video giant has consistently found more people around the world
willing to pay for access to its content. But on July 17, when the
Los Gatos, Calif.-based company announced second-quarter
results, its subscription numbers came up short of expectations.
So how do you find the consensus for such a metric? That’s
where MODL comes in. First, type “Netflix” in the command line
and click on the NFLX US Equity match. Then type “estimates and
models” and click on the MODL–Analyst Estimates and Models
item. The shortcut is {NFLX US Equity MODL
scroll down to the Net Membership Additions section to see
consensus numbers for paid memberships.
Before Netflix reported, the consensus of analysts’ models
called for the company to add a bit more than 5 million paying
streaming subscribers in the quarter: 309,000 in the U.S. and
4.75 million outside of the U.S. Instead, the company added only
2.7 million subscribers—losing 126,000 in the U.S. while gaining
2.83 million internationally.
Altogether, subscriber gains were 2.35 million fewer than
anticipated. Hence, the dramatic drop in the stock. For Netflix,
subscriber numbers are a key driver of performance.Product
Another way to use MODL is by looking at product breakdown
estimates. Consider, for example, cloud revenue at big tech com-
panies. Famously, the growth of Amazon Web Services helped to
make Amazon.com Inc. into one of the most valuable companies
in the world. How fast are its competitors growing? You can use
the consensus analyst forecasts from MODL to put together a
simple comparison. Here’s how.
Let’s start with the Amazon of China, Alibaba Group Holding
Ltd. Type “Alibaba” and click on the BABA US Equity match. Run
{MODL <GO>} again and click on the Source View tab. Scroll down
to the Business Breakdown section, then under that heading, to
the Cloud Computing item. As of early September, the consensus,
which was based on nine analysts’ models, called for cloud com-
puting to generate 9.34 billion yuan ($1.31 billion) in revenue for
Alibaba in the second quarter of the 2020 fiscal year (FIG. 1). The
projection for one year out: 14.14 billion yuan. That’s a growth rate
of 54%. You can use the slider at the bottom of the screen to see
estimates for further in the future.
If you plug in Amazon’s ticker, you can see that the e-commerce
giant is expected to increase revenue from AWS by 32% over the next
four quarters. Do the same with Microsoft (24% growth), Oracle (1%),
and Salesforce.com (17%), and you can get a picture of which company
is expected to increase cloud computing revenue the fastest. The38