Revenue and Profit Expected to Show Strong Growth
Netflix is scheduled to release its second-quarter earnings report after market close on Thursday, amid high expectations and a 40% year-to-date stock rally. Wall Street consensus, according to Bloomberg, forecasts revenue of $11.06 billion and earnings per share (EPS) of $7.09. These figures represent significant growth from last year’s $9.56 billion in revenue and $4.88 EPS. Netflix’s own guidance closely matches expectations, with the company projecting $11.04 billion in revenue and $7.03 EPS.
As the company continues its shift in strategy, Netflix no longer provides quarterly subscriber numbers. With a base of over 301 million global users at the end of 2024, it plans to update that metric only upon hitting key milestones. The focus has shifted toward revenue expansion, engagement metrics, and monetization opportunities, particularly in advertising and live content.
Advertising and Live Content Drive New Growth Narrative
Netflix’s foray into advertising is proving to be a major revenue lever. The ad-supported tier is estimated to generate $3 billion this year, more than double the $1.4 billion recorded in 2024. In May, the platform reported 94 million monthly active users on its ad-tier, up from 70 million in November. These users average 41 hours of monthly viewing—on par with ad-free subscribers—indicating strong engagement.
Live events and sports have also taken center stage. Recent programming such as the Taylor vs. Serrano boxing match, NFL games scheduled for Christmas Day, and the addition of weekly WWE Raw have expanded Netflix’s appeal. There’s growing speculation that Netflix may soon add UFC content to its roster, a move that could further boost user engagement and attract premium ad spending.
Valuation Sparks Division Among Analysts
Netflix’s rapid share price appreciation has reignited debate about its valuation. The stock currently trades at roughly 40 times forward earnings—considerably above both the S&P 500 average and many of its tech peers. JPMorgan remains cautious, maintaining a Neutral rating and a $1,220 price target, suggesting that much of the positive outlook is already priced in.
Others are more optimistic. Zacks Investment Management’s Brian Mulberry argued that while the valuation may appear high, projected annual EPS growth of 21% over the next three years justifies the premium. This growth rate is nearly triple that of the broader market, making Netflix a rare tech stock with both momentum and long-term upside.
Content Pipeline and Low Churn Support Bullish Outlook
Netflix continues to lead the streaming sector with the lowest subscriber churn, highlighting its content strength and customer loyalty. The second half of the year is packed with anticipated releases including new seasons of “Wednesday,” “Stranger Things,” and “Squid Game.” This strong pipeline positions the company to maintain engagement and potentially draw in new viewers, especially as competition in the streaming space intensifies.
According to Bloomberg, 42 analysts currently rate Netflix as a Buy, 18 as Hold, and just one as a Sell. The average price target stands at $1,263 per share, indicating moderate upside potential from current levels. Whether Netflix can sustain its rally will hinge on how investors interpret its earnings, advertising metrics, and live content strategy in Thursday’s report.
