Netflix (NFLX) Stock: What To Expect From Earnings Tuesday October 21?

TLDR

Table of Contents

Netflix is expected to report Q3 earnings of $6.96 per share on revenue of $11.51 billion, compared to $5.40 per share on $9.83 billion last year.
The Canelo vs. Crawford fight drew over 41 million viewers, becoming the most-watched men’s championship boxing match of the century.
Netflix’s advertising revenue is projected to more than double from $1.4 billion in 2024 to $2.9 billion in 2025.
Shares have risen 40% this year but dropped 10% from their June record high of $1,339.13.
The stock trades at 45 times forward earnings, with analysts warning the valuation leaves little room for error.

Netflix reports third-quarter earnings after market close on Tuesday, with Wall Street expecting strong results driven by live events and advertising momentum. Analysts surveyed by FactSet predict adjusted earnings of $6.96 per share on revenue of $11.51 billion. Last year’s third quarter saw earnings of $5.40 per share on revenue of $9.83 billion.

Netflix, Inc., NFLX

The company stopped reporting subscriber numbers. But Wedbush analyst Alicia Reese wrote that Netflix continues to produce strong results with more growth ahead.

Reese’s survey data suggests subscribers keep growing and have absorbed price increases without much pushback. The advertising business is starting to gain traction.

She rates the stock as Outperform with a $1,500 price target. That’s more than 20% above the current price.

Netflix has spent recent years cracking down on password sharing and introducing lower-priced ad tiers. These moves helped boost growth numbers.

Now the company needs to find new ways to keep current customers engaged while adding new subscribers. The focus has shifted to fresh content strategies.

Live Events Draw Big Audiences

Live events have become a key part of Netflix’s strategy. The Canelo vs. Crawford boxing match brought in an estimated 41.4 million viewers.

BofA Securities analyst Jessica Reif Ehrlich noted this made it the most-viewed men’s championship boxing match of the century. She rates the stock as a Buy with a $1,490 price target.

The animated film “KPop Demon Hunters” became Netflix’s most-viewed film of all time. It racked up 325 million views in August.

This shows the company can turn relatively unknown properties into massive hits. The content strategy seems to be working so far.

Netflix recently announced a video podcast partnership with Spotify. Select shows from Spotify Studios and The Ringer will arrive on Netflix in early 2026.

These include “The Bill Simmons Podcast,” “The Rewatchables,” and “Serial Killers.” The deal adds another content vertical to the platform.

Advertising Business Gaining Steam

The advertising tier has become a major focus for future growth. JPMorgan analyst Doug Anmuth projects advertising revenue will more than double from $1.4 billion in 2024 to $2.9 billion in 2025.

By 2026, ad revenue could hit $4.2 billion, representing a 45% increase. This makes advertising the dominant growth engine through 2026.

Netflix recently expanded its ad reach through a new Amazon DSP integration. The move gives marketers more ways to buy inventory on the platform.

Anmuth said this should support improved advertiser onboarding and flexible buying. The integration covers 11 markets starting this quarter.

Competition remains a concern for investors. Paramount+, HBO Max, Disney+, and Peacock all compete for viewer attention.

YouTube continues to hold the top spot for total TV streaming time, just ahead of Netflix, according to Nielsen research. The streaming landscape stays crowded.

Reports surfaced last month that Paramount Skydance might bid for Warner Bros. Discovery. Analysts at JPMorgan and Bank of America don’t see Netflix making a similar acquisition play.

JPMorgan noted Netflix is “certainly not an acquisitive company.” The company prefers building to buying.

Morgan Stanley analyst Ben Swinburne flagged long-term risks from generative AI. While not a near-term threat, AI-native platforms could represent the next distribution model for content.

Market leaders rarely carry their dominance from one cycle to the next. This could pose challenges down the road.

The stock trades around 45 times forward earnings. That’s a steep premium to both the broader market and tech peers.

Analysts at JPMorgan and Citi have cautioned that much optimism around ad-tier growth may already be priced into shares. The valuation leaves little room for disappointment.

Shares have climbed 40% this year and 61% over the last 12 months. But the stock has declined about 10% from its record closing high of $1,339.13 on June 30.

Recent controversy emerged when Elon Musk urged users to cancel subscriptions, accusing the streamer of pushing “woke” content. Netflix stock fell 5% following Musk’s comments, which have quieted in recent weeks.

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