TLDR
- Netflix earnings scheduled for January 20 with Wall Street expecting $0.55 EPS and $12 billion revenue
- Stock down 33% from highs due to Warner Bros. Discovery deal uncertainty and Paramount legal challenge
- Stranger Things finale boosted Q4, but surveys show subscribers staying for Bridgerton and WWE content
- Ad-supported tier retention improving quarterly with lowest ad load among streaming platforms
- Analysts predict 7.78% post-earnings move with Moderate Buy rating and $127 average price target
Netflix releases fourth-quarter earnings after market close on January 20. Analysts expect solid performance from the streaming company.
Wall Street forecasts earnings of 55 cents per share for Q4. This marks a 28% increase from last year. Revenue projections sit at $12 billion for the quarter.
The streaming service faces questions about sustaining growth. Shares have fallen 33% from their 52-week peak. Warner Bros. Discovery acquisition concerns weigh on the stock. Paramount’s lawsuit adds another layer of uncertainty.
Content Library Drives Engagement Beyond Hit Shows
Wedbush analyst Alicia Reese sees strength beyond Stranger Things. Her firm’s survey data reveals subscriber numbers remained stable after the show’s finale.
Lapsed users returned to the platform in recent months. They stayed for diverse content including Bridgerton and WWE programming. Netflix’s extensive content library maintains quarter-over-quarter engagement.
This variety reduces dependence on single titles. Reese views the content pipeline as supporting durable growth. She recommends buying at current levels.
Options traders anticipate a 7.78% swing following the earnings announcement. This exceeds the four-quarter average move of 5.82%.
Growing Ad Revenue Opportunity
Reese calls Netflix profitable regardless of the Warner Bros. deal outcome. The advertising business presents an overlooked opportunity.
Netflix maintains the lowest ad load compared to competitors and traditional television. Viewers experience less intrusive advertising. Survey data shows ad-tier retention improving each quarter with fewer customers switching away.
The company can increase ad load slightly without losing subscribers. Advertisers flock to the platform due to data capabilities and partnerships with Amazon. The ad tier evolves into a core revenue driver rather than a side project.
If Warner Bros. closes, production would ramp up across studios. This enhances advertising leverage further.
KeyBanc analyst Justin Patterson reduced his price target to $110 from $139. He maintains a Buy rating despite near-term headwinds. Patterson expects Warner Bros. deal uncertainty to pressure valuation. He forecasts 13% revenue growth in 2026 with softer operating margins.
BMO Capital analyst Brian Pitz holds a Buy rating with a $143 target. He highlights robust Q4 engagement from Stranger Things, Christmas Day NFL games, and Jake Paul’s boxing match. Pitz projects 16% Q4 revenue growth excluding foreign exchange impacts.
Wall Street assigns a Moderate Buy consensus rating. The average price target of $127.23 implies 45% upside potential. TipRanks’ AI Analyst rates the stock Outperform with a $103 target.
International business strength, content slate quality, and growing ad revenue should benefit Q4 results. Analysts expect revenue growth to moderate to 13.5% in 2026 from 16% in 2025.
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