TLDR
- Netflix delivers Q4 2025 results January 20 with analysts projecting $0.55 EPS (28% growth) and $11.97 billion revenue (16.7% growth)
- Shares plunged 28% following October’s Q3 report that missed operating margin expectations at 28.2% versus 31.5% estimate
- Warner Bros. Discovery asset acquisition creates headwinds as Paramount Skydance launches competing $30/share hostile takeover bid
- Wall Street consensus shows Moderate Buy with $127.23 price target implying 44.5% upside from current trading levels
- Key metrics include operating margin performance, advertising revenue momentum, and fiscal 2026 full-year guidance
Netflix steps into the spotlight January 20 when it releases fourth-quarter earnings. The streaming leader’s shares have tumbled hard since October, dropping 28% and testing investor patience.
Analysts expect $0.55 per share in earnings, marking a solid 28% jump year-over-year. Revenue forecasts point to $11.97 billion, representing 16.7% growth. The company has topped Wall Street estimates in six of its last eight quarterly reports, building a track record of execution.
The October report sparked the decline despite decent headline numbers. Revenue hit $11.5 billion while earnings reached $5.87 per share, both showing growth. The problem emerged in operating margins. Netflix posted 28.2% versus expectations of 31.5%. A $619 million charge from Brazilian tax issues made things worse.
Warner Bros. Discovery’s assets became the center of attention as Netflix pursues an acquisition. Paramount Skydance complicated matters by launching a $30 per share hostile bid for WBD. The bidding war and related legal battles have created uncertainty that weighs on the stock.
Price Targets Reflect Mixed Sentiment
Wedbush’s Alicia Reese lowered her price target to $115 from $140 but kept her Buy rating intact. She highlights Netflix’s advertising potential as a game-changer. Enhanced targeting capabilities, expanded partnerships, and new shopping features should drive faster ad revenue growth in upcoming years.
Brian White from Monness Crespi maintains a Hold rating, pointing to the Warner Bros. situation as an overhang. He expects Netflix to hit his estimates, which sit above consensus numbers. For 2026, White projects $51.618 billion in revenue, a 14% increase, with $3.24 EPS matching Street forecasts.
The acquisition debate splits analyst opinion. Some view it as necessary defense against competitors. Others suggest Apple could extract more value from Warner Bros. content to strengthen Apple TV’s offerings.
What Investors Should Watch
Operating margins take center stage this quarter. Management guided for 23.9% in Q4 and 29.3% for full-year 2025. Those numbers need to land cleanly after last quarter’s miss rattled confidence.
Advertising revenue updates matter more than ever. With U.S. subscriber growth slowing, the ad business provides crucial expansion opportunities. Price increases for subscription tiers could surface as management looks to offset domestic headwinds.
International markets continue delivering subscriber additions. Investors want visibility into regional performance, content strategy, and engagement metrics. The competitive landscape remains intense with rivals spending heavily on original programming.
Netflix trades at valuations well below recent averages. The selloff created potential entry points for investors with long time horizons. TipRanks data reveals 26 Buy ratings, nine Holds, and two Sells. The consensus $127.23 price target suggests substantial upside of 44.5%.
Five analysts reaffirmed Buy ratings heading into the report. Two stuck with Hold positions. The mixed ratings reflect uncertainty around profitability trends and the Warner Bros. acquisition outcome.
Fourth-quarter guidance calls for $11.9 billion revenue. Full-year 2025 projections sit at $45.1 billion. Management will likely provide detailed 2026 guidance when results drop Tuesday after the closing bell.
