TLDR
- Netflix reports Q3 earnings Tuesday with analysts expecting $6.96 per share on revenue of $11.51 billion versus $5.40 per share on $9.83 billion last year.
- The Canelo vs. Crawford boxing match attracted 41 million viewers, making it the most-watched men’s championship boxing match this century.
- Advertising revenue is forecast to jump from $1.4 billion in 2024 to $2.9 billion in 2025, then reach $4.2 billion by 2026.
- Netflix stock has gained 40% year to date but sits 10% below its June record high of $1,339.13.
- The stock trades at 45 times forward earnings, raising concerns about valuation among Wall Street analysts.
Netflix releases third-quarter earnings after market close Tuesday. Wall Street expects adjusted earnings of $6.96 per share on revenue of $11.51 billion.
Last year’s third quarter brought earnings of $5.40 per share on revenue of $9.83 billion. The year-over-year comparison shows strong growth.
The company no longer reports subscriber numbers. But Wedbush analyst Alicia Reese says Netflix continues producing strong results with growth ahead.
Her survey data shows subscribers keep growing. They’ve absorbed price increases without major resistance.
The advertising business is gaining momentum. Reese rates the stock as Outperform with a $1,500 price target, more than 20% above current levels.
Live Events Strategy Pays Off
Live programming has become a cornerstone of Netflix’s content strategy. The Canelo vs. Crawford boxing match drew 41.4 million viewers worldwide.
BofA Securities analyst Jessica Reif Ehrlich calls it the most-viewed men’s championship boxing match of the century. She maintains a Buy rating with a $1,490 price target.
The animated film “KPop Demon Hunters” set a company record. It became Netflix’s most-viewed film ever with 325 million views.
This proves the platform can turn unknown properties into massive hits. The content approach appears to be working.
Netflix announced a video podcast partnership with Spotify last month. Shows from Spotify Studios and The Ringer arrive in early 2026.
The deal includes “The Bill Simmons Podcast,” “The Rewatchables,” and “Serial Killers.” It adds another content category to the platform.
Advertising Growth Accelerates
The ad-supported tier is driving future growth projections. JPMorgan analyst Doug Anmuth forecasts 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. That represents a 45% increase from 2025 levels.
Netflix expanded its ad reach through Amazon DSP integration. Marketers now have more ways to buy inventory across the platform.
The integration covers 11 markets starting this quarter. Anmuth says it should improve advertiser onboarding and measurement.
Competition remains fierce in streaming. Paramount+, HBO Max, Disney+, and Peacock all fight for viewers.
YouTube holds the top spot for total TV streaming time, just ahead of Netflix, per Nielsen data. The landscape stays crowded.
Stock Performance and Valuation
Netflix shares have climbed 40% this year and 61% over the last 12 months. But the stock has dropped 10% from its June 30 record close of $1,339.13.
The stock trades around 45 times forward earnings. That’s a premium to both the broader market and tech peers.
JPMorgan and Citi analysts warn that much optimism around ad growth may already be priced in. The valuation leaves little room for error.
Reports emerged that Paramount Skydance might bid for Warner Bros. Discovery. JPMorgan analysts don’t expect Netflix to make similar acquisition moves.
The company prefers building to buying. Netflix is “certainly not an acquisitive company,” according to JPMorgan.
Morgan Stanley’s Ben Swinburne flagged long-term AI risks. AI-native platforms could represent the next content distribution model.
Controversy surfaced when Elon Musk urged subscription cancellations over content concerns. Netflix stock fell 5% following his comments, which have since quieted.
Netflix reports third-quarter results Tuesday with Wall Street watching advertising momentum and live event performance closely.
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