Netflix Q1 Earnings Preview: Wall Street Expects Solid Results, Sees Stock as Safe Haven Amid Potential Economic Downturn

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This week, Netflix, widely recognized as the uncontested leader in subscription-based streaming services by financial experts, commences the reporting of Q1 earnings for the media and entertainment industry. The financial world expects a robust performance from Netflix for this quarter, marking the first time they will no longer reveal their subscriber numbers. Moreover, it’s believed that Netflix is in a favorable position to navigate through any economic challenges that may arise.

Netflix is set to release their Q1 2025 financial results on Thursday, April 17, following the close of market hours. As per the consensus among Wall Street analysts, the company is expected to generate quarterly revenue of approximately $10.51 billion, marking a 12% increase year over year. The estimated earnings per share stand at $5.66, representing a 7% rise. These figures are slightly above Netflix’s earlier projections for revenue of $10.42 billion and EPS of $5.58, according to LSEG Data & Analytics.

In light of market instability, we consider Netflix to be one of the safest stocks within our analysis group if a wider economic downturn occurs, according to TD Cowen’s team led by John Blackledge in their April 8 report.

Initially, it’s predicted that Netflix won’t experience substantial direct harm due to Trump administration tariffs. TD Cowen analysts attribute this to several factors: a strong global demand for content, the appealing value proposition of Netflix compared to other out-of-home entertainment, and the ongoing shift towards streaming video as a trend. TD Cowen maintains a “buy” recommendation for Netflix with a projected price of $1,150 per share within the next year.

In the first half of 2025, Netflix’s shares have surpassed the general market trend: The stock has increased by over 7% this year, while the S&P 500 index has dropped more than 10%, largely due to President Trump’s tariff declarations and the intensifying trade conflict with China.

David Joyce, an equity analyst at Seaport Research Partners, also pointed out that Netflix offers one of the most affordable forms of entertainment when considering cost per hour of engagement.

As a movie enthusiast, I’d say that when economic downturns occur, services like Netflix (and other streaming platforms, of course) become an attractive choice for staying at home instead of going out, because it’s highly probable that this expense will be one of the last to be reduced from a consumer’s budget. In terms of cost, the monthly premium service of Netflix in the U.S. equals approximately the price of a single IMAX ticket in major cities for two hours, or about one-fifth of the average cost of a Live Nation ticket for a 2-hour event – not to mention comparing it to professional sports events or theme parks. Joyce has rated Netflix as a “buy” with a projected 12-month price target of $1,025 per share.

Starting from the first quarter of 2025, Netflix will no longer routinely disclose its paid subscriber count and average revenue per user (ARPU). Instead, they consider metrics like user engagement and financial indicators such as revenue and operating margin to be more significant. However, they will still announce new paid memberships when they reach key milestones. In the fourth quarter of 2024, Netflix added approximately double the expected number of new global subscribers (18.9 million), bringing their total to 301.6 million by year’s end.

In a recent statement, analyst Alicia Reese from Wedbush Securities noted that with Netflix no longer disclosing its subscriber numbers, the company is now able to concentrate exclusively on increasing its revenue. This change comes after Netflix raised prices across all tiers in both the U.S. and other countries back in January. By doing so, even if some subscribers decide to cancel their service, Netflix can hide these losses by emphasizing substantial revenue growth.

As a movie enthusiast, I am eagerly anticipating updates on Netflix’s forthcoming advertising tier, a burgeoning development that could reshape the streaming landscape. The American debut of their proprietary ad technology is scheduled for April this year, following a successful trial in Canada. Keeping my eyes peeled, I will be on the lookout for any hints regarding the potential rollout in the remaining 10 global markets towards the latter half of 2025.

In simpler terms, Netflix increased its revenue projection for 2025, expecting it to be anywhere from $43.5 billion to $44.5 billion – that’s a $500 million rise compared to their previous prediction. Additionally, they anticipate an operating margin of 29%, which is one percentage point higher than what they previously estimated. Analyst Dan Reese from Wedbush Securities stated that there could be significant growth potential in Netflix’s 2025 forecast, considering they plan to spend approximately $18 billion on content that year.

By 2025, the company has announced the comeback of three highly anticipated TV series – “Squid Game”, “Wednesday” and “Stranger Things”. Additionally, they aim to expand into new territories such as live events and gaming. Notably, starting January 2025, Netflix began broadcasting WWE’s “Monday Night Raw” exclusively in the U.S., Canada, the U.K., and Latin America weekly. They will also repeat their NFL double-header on Christmas Day 2025.

Netflix is planning to boost its ad-based income significantly over the coming years by enhancing live events offerings, optimizing advertising solutions and precision targeting, and expanding its content strategy, as stated by Reese. The analyst continues to recommend a ‘buy’ stance on Netflix with a projected price of $1,150 per share within the next year, based on a price-to-earnings ratio of 34 times their estimated earnings for 2027.

In the recent survey conducted by TD Cowen involving 2,500 U.S. consumers, it was found that Netflix remains the preferred choice for watching video content on TVs at home. When asked about their most frequently used platform for viewing TV shows and movies, Netflix led the pack in February 2025 with 25% of responses, followed by YouTube (15%) and basic cable (10%). Blackledge, from TD Cowen, believes that Netflix’s extensive library spanning various genres offers a long-term advantage.

(Pictured above: Netflix’s hit limited series “Adolescence”)

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2025-04-16 22:17