Netflix (NFLX) Earnings Preview: Strong Results Expected Amidst Macroeconomic Challenges
Netflix (NFLX) is poised to release its fiscal fourth-quarter earnings after market close on Tuesday. Analysts anticipate robust performance following a strong conclusion to the year, highlighted by consecutive NFL games, the popular "Jake Paul vs. Mike Tyson" boxing match, and the return of the global phenomenon "Squid Game."
Despite a pullback in stock price since the start of the year after reaching record highs in 2024, Netflix remains highly regarded by industry experts. According to Bloomberg consensus estimates, Wall Street projects:
* Revenue: $10.11 billion (Netflix guidance: $10.13 billion) versus $8.83 billion in Q4 2023
* Earnings per share: $4.18 (Netflix guidance: $4.23) versus $2.11 in Q4 2023
* Net subscriber additions: 9.18 million versus 13.12 million in Q4 2023
Geetha Ranganathan, senior analyst at Bloomberg Intelligence, emphasizes the high expectations for this quarter. She attributes Netflix's solid outlook to an unparalleled content slate, including live sports programming that has dominated the platform. Notably, the Jake Paul and Mike Tyson match garnered over 108 million viewers worldwide, becoming the most-watched sporting event in history. In comparison, the 2024 Super Bowl, the most-watched American TV broadcast ever, attracted 124 million U.S. viewers. Similarly, NFL games averaged approximately 30 million viewers.
Ranganathan anticipates that the recent addition of WWE Raw will further drive subscriber growth and retention. She believes that "this is really the big shift we're going to see this quarter" and expects "well over 10 million subscriber additions" as a result.
Investors have taken notice of Netflix's efforts in the past year, which have included successful advertising initiatives in addition to a strong content lineup. Netflix's ad tier has amassed 70 million monthly active users worldwide.
Despite a surge in year-over-year engagement, the company's biannual viewership report indicates a flattening in growth. This could potentially impact Netflix's ability to increase prices and boost revenue.
Netflix last increased the cost of its Standard plan in January 2022, raising it from $13.99 to $15.49 per month. The Premium tier was also raised by $2 to $19.99 monthly, with a subsequent price hike in October 2024 to $22.99. The ad-supported plan remains one of the most affordable among major streaming services at $6.99 per month.
Analysts predict a downward revision to Netflix's 2025 revenue outlook due to the strengthening dollar. Ranganathan believes that Netflix will "temper those revenue growth projections" but offset this with "a big price increase, which could happen anytime this year."