TLDR
- Netflix reports Q4 earnings January 20 with consensus estimates of $0.55 EPS and $12 billion revenue
- Shares trading 33% below 52-week highs on Warner Bros. Discovery acquisition uncertainty
- Subscriber surveys indicate engagement holding strong after Stranger Things with users staying for WWE and Bridgerton
- Ad-supported tier showing quarterly retention gains with room to expand ad load without user churn
- Wall Street consensus rating is Moderate Buy with $127.23 average target price
Netflix announces fourth-quarter results on January 20 after market close. The streaming platform faces investor scrutiny over growth sustainability.
Analysts expect earnings of 55 cents per share for Q4. That represents 28% growth year-over-year. Revenue estimates reach $12 billion for the quarter.
The stock has declined 33% from its 52-week high. Uncertainty around the Warner Bros. Discovery acquisition weighs on shares. Paramount’s legal challenge over the deal adds pressure.
Stranger Things’ final season drove Q4 engagement. But investors want proof of staying power beyond blockbuster titles.
Subscriber Retention Holds After Stranger Things
Wedbush analyst Alicia Reese sees durable growth ahead. Survey data from her firm shows subscribers remained active after Stranger Things ended.
Users who left the platform for three months or more returned recently. They’re watching content beyond the hit series. Bridgerton and WWE programming keep viewers engaged.
Netflix’s deep content library ensures consistent usage patterns. This reduces reliance on individual show performance. Reese believes the pipeline supports long-term growth and recommends buying the stock.
Options traders expect a 7.78% price swing after earnings. This tops the 5.82% average move from the past four quarters.
Ad Business Emerges as Key Growth Driver
Reese views Netflix as profitable with or without Warner Bros. assets. The advertising opportunity remains underappreciated by investors.
Netflix runs fewer ads than any streaming competitor or traditional TV network. This creates a better viewer experience. Quarterly surveys show ad-tier subscribers staying at higher rates each period.
The company can increase ad frequency without driving users away. Advertisers are joining the platform thanks to data advantages and partnerships with Amazon and other platforms. The ad tier is becoming a fundamental revenue source.
A successful Warner Bros. deal would boost production across both studios. This expands advertising leverage further.
KeyBanc’s Justin Patterson lowered his price target to $110 from $139 while keeping a Buy rating. He expects near-term valuation pressure from deal uncertainty and tougher content comparisons. Patterson forecasts 13% revenue growth in 2026 with weaker operating margins.
BMO Capital’s Brian Pitz maintains a $143 price target with a Buy rating. He notes strong Q4 engagement from Stranger Things, NFL Christmas games, and Jake Paul’s boxing event. Pitz projects 16% Q4 revenue growth excluding currency impacts. He sees 2026 revenue growth slowing to 13.5% from 16% in 2025.
Wall Street rates Netflix a Moderate Buy overall. The consensus target of $127.23 suggests 45% upside. TipRanks’ AI Analyst gives an Outperform rating with a $103 target based on strong financials.
International expansion, content strength, and ad revenue growth should drive Q4 performance. Analysts expect the company to deliver on revenue expectations of $11.97 billion despite macro headwinds.
