Netflix reports strong earnings, but shares remain under pressure. NFLX forecast for 2026

Netflix delivered Q1 2026 results ahead of expectations for both revenue and earnings. However, part of the strong performance was supported by one-off income, while the company left its full-year guidance unchanged. NFLX shares remain below the 200-day moving average, and the base case for 2026 assumes a move towards 100 USD, followed by a decline towards 65 USD.

Netflix, Inc. (NASDAQ: NFLX) reported better-than-expected results for Q1 2026 across key metrics. Revenue increased to 12.25 billion USD, up 16% year-on-year and slightly above the analyst consensus of around 12.18 billion USD. Earnings per share came in at 1.23 USD, operating profit reached 3.96 billion USD, and operating margin improved to 32.3%. The main drivers of the quarter were subscriber growth, price increases, and rising advertising revenue. The company also noted that revenue exceeded its own guidance due to stronger-than-expected subscriber additions and favourable currency effects.

However, the sharp increase in net income was partly amplified by a one-off factor. Netflix stated that earnings per share received additional support from a 2.8 billion USD termination fee related to the cancelled Warner Bros. deal, which was recorded under other income. For the same reason, free cash flow increased to 5.09 billion USD, compared with 2.66 billion USD a year earlier. This means the underlying quarter was strong, but reported profitability was further boosted by non-recurring income.

Netflix left its full-year 2026 guidance unchanged. The company continues to expect revenue of 50.7–51.7 billion USD, an operating margin of 31.5%, and a doubling of advertising revenue in 2026. For Q2 2026, Netflix forecasts revenue of 12.57 billion USD, earnings per share of 0.78 USD, and an operating margin of 32.6%.

Despite the strong headline results, the market reaction was restrained. Guidance for next quarter’s earnings came in below expectations, revenue growth is projected to slow to its weakest pace in a year, and an additional negative factor was the announcement that Reed Hastings would step down as Chairman of the Board. Against this backdrop, Netflix shares declined notably following the earnings release.

This article reviews Netflix, Inc., presents its quarterly results, and provides fundamental and technical analysis of NFLX shares, forming the basis for the forecast for Netflix stock in 2026.

About Netflix, Inc.

Netflix, Inc. was founded on 29 August 1997 by Reed Hastings and Mark Randolph. The company initially delivered DVDs on a subscription basis. Clients could order a film through the website and receive it by post. In 2007, Netflix launched a streaming service, allowing users to watch movies and TV shows online.

The transition to live streaming was pivotal in the company’s history. Netflix began actively expanding its content library to include licensed films, series and original projects. By July 2024, Netflix had 277 million subscribers worldwide, making it the largest streaming platform.

Netflix, Inc.’s key financial flows

Netflix’s revenue mainly comes from streaming services, advertising, and other sources. The main components are outlined below:

• Subscription fees: Netflix’s primary revenue stream, derived from ad-supported and ad-free subscriptions.
• Advertising revenue: payments from companies for placing advertisements.
• Content licensing and distribution: revenue is generated from providing paid licences for Netflix’s original and purchased content to other platforms and TV channels. This segment also includes income from partnerships with telecommunication providers, cable companies, and other distributors that offer Netflix as part of their packages.
• Other revenue streams: sales of merchandise related to Netflix series and films (e.g. toys, apparel, and collectables). The company has also started investing in the gaming industry by offering mobile games based on its intellectual property, creating additional opportunities for revenue growth.

Most of Netflix’s revenue derives from streaming subscriptions, while advertising, licensing, and other business segments offer additional potential for income growth.

Netflix, Inc. Q2 2024 financial results

Netflix released its Q2 2024 report on 18 July. Below is a comparison of its results with the same period in 2023:

• Revenue: 9.56 billion USD (+17%)
• Net income: 2.15 billion USD (+44%)
• Earnings per share: 4.88 USD (+48%)
• Operating profit: 2.60 billion USD (+44%)
• Operating margin: 27.2%​ (+490 basis points)
• Total subscribers: 277.65 million (+16%)

Although the company’s subscriber numbers continue to increase quarter over quarter, this growth is gradually slowing. The increase in memberships in Q4 2023 surpassed previous figures by 13.13 million, followed by 9.32 million in Q1 2024 and 8.05 million in Q2 2024. Netflix is facing challenges in identifying new catalysts for subscriber growth. The company is now attracting new subscribers by addressing password sharing and reducing the cost of ad-supported subscription plans. Market participants are sensitive to these statistics; a look at the stock behaviour when Netflix reported a loss of 200 thousand subscribers in Q1 2022 reflects this, dragging the share price down by over 30% and continuing its decline.

Netflix’s management plans to stop publishing subscriber statistics from 2025 onwards to mitigate these challenges and focus investors’ attention on revenue per user, total revenue, and operating margin.

Amid slowing membership growth, the company is exploring new growth drivers, with advertising viewed as a potential source. Netflix’s management has noted that advertising is becoming increasingly significant to the company’s operations. However, building this business from scratch will take time, meaning it is unlikely to become the primary driver of revenue growth in 2024 and 2025.

Netflix forecasts 14% year-on-year revenue growth in Q3 2024, although a lower increase in paying users is expected compared to the same period in 2023. At the same time, no changes are anticipated for the global average revenue per user.

Based on the 2024 results, revenue is projected to rise by 14−15%, compared with the earlier forecast of 13−15%, while the operating margin is expected to reach 26%, up from the earlier estimate of 25%. The company’s goal remains to increase operating profit.

Netflix, Inc. Q3 2024 financial results

Netflix released its Q3 2024 report on 17 October. Below is a comparison of its data with the corresponding period in 2023:

• Revenue: 9.82 billion USD (+15%)
• Net income: 2.36 billion USD (+41%)
• Earnings per share: 5.40 USD (+20%)
• Operating profit: 2.94 billion USD (+25%)
• Operating margin: 29.6%​ (+720 basis points)
• Total subscribers: 282.7 million (+14%)

Co-CEO Theodore Sarandos noted that content production is recovering after last year’s strikes in Hollywood, with series rebounding more rapidly than films. The company’s advertising business showed significant growth, with the number of subscribers to ad-supported plans increasing by 35% from the previous quarter. More than half of new users in regions with ad services chose this package option. However, the company emphasised that effective ad monetisation will take time, and this segment will not become a primary revenue stream in the near term.

In Q4 2024, Netflix projected earnings per share of 4.20 USD, with revenue of 10.12 billion USD, representing annual revenue growth of 15%. The total number of subscribers was forecast to increase by 8.2 million to approximately 290.9 million.

The company anticipated that its advertising revenue would double in 2025, driven by a 150% increase in advertising commitments secured during 2024. Despite the upbeat forecast, Netflix noted that advertising was not expected to become a primary revenue driver in the near term. This guidance highlighted the company’s ongoing efforts to strengthen its position in the streaming market and diversify its revenue streams.

Netflix, Inc. Q4 2024 financial results

Netflix released a strong Q4 2024 report on 21 January. Below is a comparison of its results with the corresponding period in 2023:

• Revenue: 10.24 billion USD (+16%)
• Net income: 1.87 billion USD (+99%)
• Earnings per share: 4.27 USD (+102%)
• Operating profit: 2.27 billion USD (+51%)
• Operating margin: 22.2% (+530 basis points)
• Total subscribers: 301.6 million (+15%)

In its commentary on the Q4 2024 results, Netflix’s management expressed satisfaction with the company’s strong financial performance and strategic progress. They highlighted a 16% year-on-year increase in revenue and a 102% rise in EPS, both of which exceeded market expectations. The quarter also saw a significant increase in subscriber numbers, reaching 301.6 million, driven by compelling content, including major releases such as the Jake Paul vs Michael Tyson fight and NFL games.

Management emphasised the importance of continued investment in original content, which has helped boost user engagement and reduce subscriber churn. Additionally, plans were announced to expand Netflix’s proprietary advertising platform to twelve countries, aiming to improve margins and monetisation by reducing reliance on intermediaries. Netflix’s management reiterated its confidence in the company’s strategic direction, highlighting that investment in content and the development of advertising technologies are key drivers of growth and long-term success.

For 2025, Netflix provided guidance indicating continued optimism. The company raised its full-year revenue forecast to approximately 44.00 billion USD – a 0.50 billion USD increase from previous estimates. The operating margin was projected at 29%, one percentage point above earlier expectations. Management also referred to plans for further investment and expansion across gaming, advertising, and live streaming, aiming to enhance the platform’s appeal to subscribers.

Netflix, Inc. Q1 2025 financial results

On 17 April, Netflix released its Q1 2025 report, demonstrating strong financial performance once again. Below is a comparison of its data with the corresponding period in 2024:

• Revenue: 10.54 billion USD (+13%)
• Net income: 2.89 billion USD (+24%)
• Earnings per share: 6.61 USD (+25%)
• Operating income: 3.34 billion USD (+27%)
• Operating margin: 31.7% (+360 basis points)

Netflix demonstrated impressive resilience amid economic challenges, including concerns about US trade policy. The company reported a 13% year-on-year revenue increase to 10.5 billion USD and a rise in net income to 2.9 billion USD. CEO Greg Peters noted that Netflix has historically been a stable company, even during economic downturns, with no significant changes in customer behaviour.

A notable development was Netflix’s strategic shift towards advertising. The ad-supported plan accounted for 55% of new subscriptions in regions where it is available, highlighting the successful development of new revenue streams. The company plans to double its advertising revenues in 2025 through its proprietary ad platform.

For Q2 2025, Netflix projected revenue of 11.04 billion USD, reflecting steady growth driven by increases in both subscriptions and advertising revenue. The company maintained its annual revenue forecast within the 43.5 to 44.5 billion USD range and raised its operating margin target to 29% (up from 28%). These projections emphasise Netflix’s confidence in its strategy and its ability to navigate economic challenges.

In its Q1 2025 earnings commentary, Netflix set an ambitious target to reach a market capitalisation of 1 trillion USD by 2030. Ted Sarandos confirmed that this is not an official forecast or financial guidance. To achieve this target, Netflix planned to double its 2024 revenue of 39 billion USD by 2030, with a primary focus on expanding its advertising segment. The company expected to generate 9 billion USD from global advertising sales by leveraging the growing popularity of its ad-supported subscription tier. Additionally, Netflix invested in its advertising technology platform, launched on 1 April 2025, which is designed to enhance its advertising capabilities and drive further revenue growth.

Netflix’s long-term growth strategy, including the goal of reaching a market capitalisation of 1 trillion USD by 2030, demonstrates its commitment to innovation and considered development.

Netflix, Inc. Q2 2025 financial results

On 17 July, Netflix released its Q2 2025 results, once again exceeding expectations. Below are the key figures compared with the same period in 2024:

• Revenue: 11.08 billion USD (+16%)
• Net income: 3.13 billion USD (+46%)
• Earnings per share: 7.19 USD (+47%)
• Operating income: 3.77 billion USD (+45%)
• Operating margin: 34.1% (+690 basis points)

Netflix delivered strong Q2 2025 results, with revenue rising 16% year-on-year to approximately 11.08 billion USD and a sharp increase in net income and earnings per share of 46−47% to 3.13 billion USD (7.19 USD per share), beating analyst expectations.

Advertising has become a new growth driver for Netflix. The company is actively developing its proprietary advertising platform, Ads Suite, which includes targeting, programmatic buying, and interactive formats. Netflix has confirmed that it expects to double advertising revenue in 2025, a segment that could significantly diversify its income streams. Content has remained a core strength. Although the company no longer discloses subscriber numbers, it reported high user engagement: the third season of Squid Game reached 122 million views, with releases such as Stranger Things and other flagship titles scheduled for the second half of the year. This helped support growth in viewing time and subscriber retention. Additionally, the implementation of AI has contributed to margin expansion. Management expected the full-year operating margin to be around 30%. The use of AI in content production and personalised recommendations has allowed the company to reduce costs and increase engagement.

For Q3 2025, management forecasted revenue of 11.53 billion USD, above the consensus estimate of 11.31 billion USD. Content expenses were forecast to rise in Q3 and especially in Q4, including costs associated with sports streaming. However, the company still projected margin growth both quarter-on-quarter and year-on-year.

Investor reaction to the Q2 2025 report was mixed. At first glance, the results were strong, with revenue and earnings per share exceeding expectations, and management raising the full-year forecast. However, despite this, shares fell by 5% the day after the report’s release, as a substantial part of the earnings growth was attributed not to operational improvements but to a favourable currency effect – a weakening US dollar.

Moreover, ahead of the report, shares had already risen significantly and were trading at a high premium – approximately 44 to 47 times forward earnings – nearly double the average level over the past three years. This meant the market had already priced in very high expectations. Consequently, following the report, some investors chose to take profits while shares were trading near their historical peak.

Netflix, Inc. Q3 2025 financial results

Netflix released its Q3 2025 results on 21 October. The key figures compared with the same period in 2024 are as follows:

• Revenue: 11.51 billion USD (+17%)
• Net profit: 2.55 billion USD (+8%)
• Earnings per share: 5.87 USD (+9%)
• Operating profit: 3.25 billion USD (+12%)
• Operating margin: 28.2% (–140 bps)
• Free cash flow: 2.66 billion USD (+21%)

Netflix delivered strong revenue growth in Q3 2025 – up 16% year-on-year – in line with the company’s forecasts. However, profit came in slightly below expectations due to one-off expenses of 619 million USD related to a tax dispute in Brazil. The company recognised these costs within cost of revenue, thereby reducing the operating margin by more than five percentage points. Without this factor, the margin would have exceeded the projected 31.5% level. Earnings per share were 5.87 USD – higher than a year earlier (5.40 USD) but approximately 1 USD below Netflix’s internal forecast due to the tax-related charge.

Despite this, the company’s core business indicators remained very strong. Netflix reported record advertising sales and a substantial increase in long-term contracts with US advertisers. Platform viewing share rose to its highest level since late 2022 in both the US and the UK. The company highlighted strong audience interest in content – with KPop Demon Hunters leading the way among films – while live streaming continued to expand, including popular broadcasts of sporting events such as the Canelo vs Crawford fight. Management reported that the advertising business continues to grow rapidly and, according to external estimates, could more than double in 2025.

For Q4 2025, Netflix expected revenue of about 11.96 billion USD, up 17% year-on-year. The operating margin was forecast at around 23.9%, two percentage points higher than in the same quarter of the previous year. For the full year 2025, the company anticipated revenue of approximately 45.1 billion USD, a 16% increase from 2024. The forecast for operating margin was slightly lowered to around 29%, down from the earlier projection of 30%, due to the one-off tax-related costs in Brazil.

Netflix, Inc. Q4 2025 financial results

Netflix released its Q4 2025 results on 20 January 2026. Below are the key figures compared with the same period in 2024:

• Revenue: 12.05 billion USD (+18%)
• Net income: 2.42 billion USD (+29%)
• Earnings per share (EPS): 0.56 USD (+31%)
• Operating income: 2.95 billion USD (+30%)
• Operating margin: 24.5% (+220 bps)
• Free cash flow: 1.87 billion USD (+35%)

For Q4 2025, Netflix delivered strong results, surpassing market expectations for both revenue and earnings per share. Revenue reached 12.05 billion USD, exceeding the analyst consensus estimate of around 11.97 billion USD. This was driven by subscriber base growth, which rose by 25 million new subscribers, bringing the total subscriber count to 325 million. This boosted subscription revenue, which continued to grow due to increased demand for content. Net income amounted to 2.42 billion USD, reflecting 29% year-on-year increase. As a result, earnings per share (EPS) stood at 0.56 USD, also exceeding market expectations of around 0.55 USD.

The sharp decline in earnings per share compared with the previous quarter (from 5.87 to 0.59 USD) was due to a technical factor – on 10 November 2025, Netflix underwent a 10-for-1 stock split. This meant that for each share held by an investor on the record date (10 November 2025), they received nine additional shares, resulting in a tenfold increase in the total number of shares. Consequently, EPS decreased, as the same amount of profit was now spread over a larger number of shares, even though the company’s net income had increased.

The primary driver of Netflix’s growth in the reporting quarter was the increase in paid subscriptions, alongside a sharp rise in advertising revenue. According to the company, advertising revenue grew by more than 2.5 times year-on-year, reinforcing Netflix’s strategy of diversifying its revenue streams.

Management also issued positive guidance for Q2 2026, forecasting revenue of approximately 12.16 billion USD, representing year-on-year growth of around 15%. Earnings per share were projected at 0.76 USD, which was likewise viewed positively by the market. Netflix expects its operating margin in the next quarter to reach 32.1%, confirming continued strong profitability. Compared with the same quarter a year earlier, this improvement suggests that Netflix continues to manage costs effectively despite rising content investment.

Regarding longer-term guidance, Netflix expects full-year 2026 revenue in the range of 50.7–51.7 billion USD, which provides a constructive signal for investors. Moreover, the company projects that advertising revenue will double to 3 billion USD this year, representing a meaningful contribution to future financial performance. This indicates that Netflix continues to expand its advertising model and increasingly views it as a key revenue pillar amid the maturation of the paid subscription market.

Netflix, Inc. Q1 2026 financial results

On 16 April, Netflix reported its Q1 2026 results. The key figures compared with the same period in 2025 are as follows:

• Revenue: 12.25 billion USD (+16%)
• Net income: 5.28 billion USD (+83%)
• Earnings per share (EPS): 1.23 USD (+86%)
• Operating income: 3.96 billion USD (+18%)
• Operating margin: 32.3% (+60 basis points)
• Free cash flow: 5.09 billion USD (+91%)

For Q1 2026, Netflix delivered strong results, exceeding market expectations on both revenue and earnings. Revenue increased to 12.25 billion USD, while operating profit rose to 3.96 billion USD. The main drivers were subscriber growth, price increases, and higher advertising revenue. The company separately noted that revenue came in slightly above its own guidance.

At the same time, the sharp increase in net income and earnings per share was further supported by a one-off factor. Netflix explicitly stated that diluted EPS of 1.23 USD was boosted by a 2.8 billion USD termination fee related to the cancelled Warner Bros. deal, which was recorded under other income. For the same reason, free cash flow increased significantly to 5.09 billion USD, compared with 2.66 billion USD a year earlier. In other words, the quarter was strong on its own, but reported profitability was additionally lifted by non-recurring income.

Netflix also emphasised that its advertising segment continues to scale. The ad-supported plan accounted for more than 60% of all new sign-ups in markets where it is available. The number of advertisers exceeded 4,000, up 70% year-on-year, with advertising revenue in 2026 expected to reach around 3 billion USD – roughly double the 2025 level.

For Q2 2026, Netflix expects revenue of 12.57 billion USD, an operating margin of 32.6%, and earnings per share of 0.78 USD. The company left its full-year 2026 guidance unchanged, continuing to expect revenue of 50.7–51.7 billion USD and an operating margin of 31.5%. However, the free cash flow forecast was raised to 12.5 billion USD from the previous 11 billion USD, primarily due to the same one-off payment related to the cancelled Warner Bros. transaction.

Netflix, Inc. key valuation multiples analysis

Below are the key valuation multiples for Netflix based on the Q1 2026 results, calculated at a share price of 92 USD.

Conclusion on Netflix’s valuation multiples

Netflix appears to be a strong and high-quality business. The company is growing rapidly, maintains high operating margins, and has a very comfortable balance sheet. However, almost all key valuation multiples, except for debt-related metrics, remain elevated, meaning that the primary risk lies in the company’s pricing level.

In addition, P/E and free cash flow metrics currently appear more favourable, driven by the one-off 2.8 billion USD payment. On a normalised basis, the stock appears even more expensive. This suggests that Netflix can be viewed as a high-quality company with a strong business model, but not as a stock offering a substantial valuation cushion.

Expert forecasts for Netflix, Inc. stock for 2026

• Barchart: 31 out of 49 analysts rated Netflix shares as Strong Buy, 5 as Buy, and 13 as Hold. The upper price target is 137 USD, and the lower bound is 92 USD.
• MarketBeat: 36 out of 51 analysts assigned a Buy rating, while 15 recommended Hold. The upper price target is 151 USD, and the lower bound is 95 USD.
• TipRanks: 27 out of 34 analysts recommended Buy, and 7 suggested Hold. The upper price target is 135 USD, and the lower bound is 95 USD.
• Stock Analysis: 15 out of 34 experts rated Netflix shares as Strong Buy, 12 as Buy, and 7 as Hold. The upper price target is 150 USD, and the lower bound is 95 USD.

Netflix, Inc. stock price forecast for 2026

In November 2025, Netflix shares on the daily timeframe broke below the 200-day moving average and have traded beneath it ever since, indicating that a downward trend continues to dominate. The decline was triggered by the company’s intention to acquire Warner Bros., as such a deal implied significant expenditure, although it could have strengthened Netflix’s competitive position in the long term. The subsequent cancellation of the transaction was initially received positively by investors. However, Warner Bros. is now set to come under Paramount’s control, which implies intensifying competition and could weigh on Netflix over the longer term.

As a result, despite the short-term relief, NFLX shares remain below the 200-day moving average, leaving room for further downside. At the same time, the Stochastic indicator is in oversold territory, signalling the likelihood of a near-term corrective rebound. Based on the current price dynamics of NFLX shares, the potential scenarios for 2026 are as follows:

The primary forecast for NFLX shares assumes a test of resistance at 100 USD, followed by a rejection and a decline towards 65 USD.

The optimistic outlook for NFLX stock assumes a breakout above the 100 USD resistance level. In this case, NFLX shares could advance towards the historical high at 133 USD.

Risks of investing in Netflix, Inc. stock

Investing in Netflix stock carries risks and potential challenges for the company. These include:

• Content costs: producing high-quality original content requires a significant investment. Inflated costs may impact the company’s profitability.
• Market saturation – subscriber numbers may slow down in countries with high penetration of streaming services.
• User reaction to ads: although users are currently tolerant of ads and subscribing to the ad-supported plan, a shift in user sentiment could significantly harm the company’s financial position.

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