Netflix gains ahead of Q1 2025 earnings 📈Will report support sentiments on Wall Street?🗽

Netflix shares (NFLX.US) are gaining just over 0.5% today ahead of the company’s key Q1 2025 earnings report. Wall Street is expected to watch the results closely, especially given that Netflix's disappointing report in 2022 preceded a major correction in the US equity market and sparked fears of a consumer-led recession. In that context, the company is now viewed as a kind of "litmus test" for discretionary spending sentiment — and potentially for broader investor mood around US consumer stocks.

The key question is: Can Netflix withstand recession fears and demonstrate resilience amid macroeconomic uncertainty? What are investors expecting this time? Notably, the company has confirmed it will stop reporting quarterly subscriber growth and ARPU (average revenue per user). This means less transparency in core growth metrics and more interpretation pressure on investors. The company says it will only release those figures upon crossing specific milestones Options markets are pricing in 8.5% implied volatility in the stock following today's report.

Expectations – The bar is set high (again)

• Revenue: $10.5 billion vs. $9.37 billion a year ago and Netflix’s own forecast of $10.42 billion

• EPS: $5.68 vs. $5.28 a year ago and Netflix guidance of $5.58

Investors are optimistic, expecting that company earnings and revenues will be a little higher than Netflix predicted itself. As of the end of 2024, Netflix had 301.6 million global subscribers. So far, its content volume and quality have translated into higher engagement, subscriber growth, and pricing power. Netflix posted a 16% year-over-year revenue increase in 2024, with its operating margin rising from 21% to 27%.

Subscriber growth reached 41 million new users, breaking its previous record from 2020. The platform’s content strength was driven by hits like Season 2 of "Squid Game", the US debut of WWE Raw, and the original drama "Adolescence" — all considered key engagement drivers. The current market's optimism around Netflix is reflecting the successful past, but is the future also that bright? Looking ahead, markets expect Q2 2025 results to show:

• Revenue: $10.88 billion

• EPS: $6.24

This would confirm Netflix’s ability not only to weather the economic storm, but also to grow in the face of consumer caution.

Wall Street commentary

• Bank of America analysts remain optimistic, calling Netflix one of the most resilient media companies amid recent volatility. They argue that the demand for entertainment remains strong even during downturns, as consumers are unlikely to cut back entirely on affordable at-home content. Raymond James takes a similar view, naming Netflix one of the most “defensive picks” in the digital media sector.

• Meanwhile, Bloomberg Intelligence highlights Netflix's ambitious goals: to double revenue and triple EBIT by 2030, with an operating margin target of 40%. With an estimated 18 million net subscriber additions annually, and a growing advertising business projected to reach $9 billion in revenue (approx. 11% of total) by 2030, Netflix is well-positioned for long-term upside.

Stock technicals (D1 Chart)

Netflix shares remain in a long-term uptrend. During the latest market pullback, the stock held the 200-day EMA support near $850, and since then, has climbed over 15%. The key technical resistance now sits around the psychological level of $1,000.

The upcoming report — in the absence of subscriber and ARPU data — may test investor confidence and increase market interpretation risk.

Valuation multiples 

Netflix trades at a premium compared to the index average, with a P/E ratio near 50, and a forward 12-month multiple of around 40. This valuation leaves little room for error — even a “strong” report might not be enough to push shares significantly higher. That said, strong capital allocation, rising ROIC, and falling WACC continue to support the narrative of long-term value creation.

Source: xStation5, XTB Research, Bloomberg Finance L.P.