Netflix (NFLX) is set to report second quarter earnings after the bell on Thursday. Shares have soared about 40% since the start of the year, with the stock’s valuation a top debate on Wall Street as the streamer doubles down on live events and sports content.
Here’s what Wall Street expects for the second quarter, according to Bloomberg consensus estimates.
Revenue: $11.06 billion versus $9.56 billion last year; Netflix’s guidance: $11.04 billion
Earnings per share: $7.09 versus $4.88 last year; Netflix’s guidance: $7.03
Investors will be focused on metrics other than subscriber numbers, which the company stopped reporting as it focuses on driving greater engagement and top-line growth.
At the end of 2024, the company had 301.6 million global subscribers. Netflix said in its fourth quarter shareholder letter it will disclose subscriber data in the future “as we cross key milestones.”
Read more about Netflix’s stock moves and today’s market action.
Wall Street analysts remain divided over Netflix’s valuation, with shares currently trading at roughly 40 times forward earnings, a notable premium compared to the broader market and even some of the company’s tech peers.
In a recent note to clients, JPMorgan urged caution, warning that much of the optimism around Netflix may already be priced in. As a result, the firm reiterated its Neutral rating on the stock and maintained a price target of $1,220 per share.
At the same time, others say the valuation is justified.
“The valuation, I understand, is a little bit rich,” Brian Mulberry, client portfolio manager at Zacks Investment Management, told Yahoo Finance, noting that Netflix trades at roughly twice the valuation of the S&P 500 (^GSPC). “But this is one of the few places where you’re actually finding really strong earnings growth projected over the next two to three years.”
Mulberry pointed to estimates that show Netflix’s earnings per share are expected to grow at an annual rate of about 21% over the next three years, triple the pace of the broader market.
He highlighted advertising as a critical growth driver, calling it the most important metric to watch after overall earnings and revenue. Netflix’s ad-tier revenue is estimated to double to about $3 billion this year, up from $1.4 billion in 2024.
In May, Netflix announced its ad-supported tier has reached 94 million global monthly active users, an increase from 70 million in November. The company also noted strong engagement among US ad-tier members, who are watching approximately 41 hours of content per month, on par with those on the ad-free plan.
Netflix also boasts a strong second-half content slate, including new seasons of tentpole series like “Wednesday,” “Stranger Things,” and “Squid Game,” which premiered its latest installment last month. Among major streaming platforms, Netflix continues to lead with the lowest subscriber churn, suggesting high user stickiness.
Additionally, live events and sports programming, such as the Taylor vs. Serrano fight, NFL Christmas Day games, and weekly WWE Raw, could further boost engagement, attract ad dollars, and support subscriber growth. Speculation has also been building around whether the UFC could be the next major sports property to land on Netflix.
According to Bloomberg data, the stock has a bullish tilt on Wall Street, with 42 Buys, 18 Holds, and just one Sell. The average price target among analysts sits around $1,263 per share, implying modest upside from current levels.
Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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