Netflix will be streaming something new this week -- its fourth-quarter earnings, which ended in December 2022.

Wall Street will be watching the report closely, as Netflix is the first large tech company to report earnings, and it could set the pace for the entire sector.

Traders and investors will be looking for clues to figure out how the rising interest rates and the slowing economy are affecting the tech sector, which has been out of favor in recent months.

According to Zacks Investment Research, the 11 analysts who follow the company expect an EPS of $0.45, far below the $1.33 it reported a year earlier.

Still, forecasting Netflix's earnings is tricky, as several factors -- subscriber growth, content acquisition costs, and growing competition from Disney and others -- determine the company's financial performance.

On subscriber growth, traders and investors will be looking to see if the streaming giant continues to add new subscribers and whether revenue per subscriber is rising or falling.

The content acquisition costs have been rising as the company has to produce original content in different languages to help retain and expand its subscription base. The critical factor here is how these costs have affected the company's profitability.

Still, there's growing competition from Disney+, HBO Max, and Peacock, which could affect Netflix in several ways. First, it could taper off Netflix's subscription growth, as viewers have a variety of alternative streaming services with rich content libraries at bargain prices.

Second, competition could limit Netflix's pricing power, especially in a challenging, maturing streaming market and a slowing economy.

Nonetheless, Kunal Sawhney, CEO of Australia-based Kalkine Group, expects Netflix to build on the momentum it accumulated in the third quarter of last year after a lackluster performance in the first half.

"It is a closely tracked stock on S&P 500, which is why its earnings report can impact the broader communication services and technology sectors," he told International Business Times. "Many traders remember that Netflix was the index's best-performing stock during the 2000-10 decade, and the company plays a leading role in the ongoing shift of movie watchers from cinema halls to mobile devices and smart TVs."

Sawhney sees Netflix's fourth-quarter subscriber growth driven by the Asia-Pacific region.

"The region presents a huge growth market for the company, and Netflix's pricing plays a key role in preventing any damage from competing service providers," he added. "The company understands that the North American region provides avenues for limited growth, which is why the focus would be largely on Asia Pacific subscribers' addition. If the Q4 numbers are promising, it would also vindicate the stock's strong run in 2023."

As with other tech companies, Netflix had to look closely at its business strategy in the face of the Nasdaq rout in the second half of 2022.

"Its services cannot remain overly expensive compared to peers, and the latest earnings report would shine the light on how tweaking the prices of its plans worked during the latter half of last year," Sawhney said. "One critical element is what Netflix has to say about its plans to prevent the issue of password sharing from becoming a major contributor to loss of revenue."

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