What Investors Need to Know Ahead of Netflix Q1 Earnings

$Netflix(NFLX)$   is scheduled to report first-quarter results after the closing bell Thursday, with analysts suggesting the streaming giant could be well-positioned to weather an uncertain macroeconomic environment.

Despite global economic challenges, including tariff-related market volatility, analysts maintain a bullish outlook on Netflix. The company is expected to report a 12% increase in revenue to $10.5 billion and an 8% rise in earnings per share to $5.73.

Subscriber growth is expected to decelerate this year

Netflix saw strong subscriber growth in 2024 (over 40 million last year), driven by its password-sharing crackdown and the expansion of its ad-supported plan. However, this momentum could slow in 2025. Moreover, rising competition could lead to higher churn rates or a slowdown in new sign-ups. The company's decision to stop reporting subscriber numbers may suggest it anticipates a deceleration in growth this year.

Analysts expect Netflix to report 4.77 million net subscriber additions in the first quarter, according to Bloomberg. Additionally, analysts will also be closely watching Netflix's margins for the quarter. Netflix's content costs are set to rise as it increasingly ventures into live sports programming, such as NFL games and WWE wrestling, which are typically higher-cost businesses.

What Analysts think of Netflix stock ahead of earnings

Citi analyst Jason Bazinet maintained his neutral rating on Netflix stock with a price target of 1,020.

"While we expect a modest Q1 '25 beat, we don't see material upside at prevailing levels," Bazinet said in a client note Thursday. "Beyond results, investor focus will likely focus on updates to firm's ad-tier and sports content strategy."

JPMorgan called Netflix the “most resilient” company it tracks, given the streamer's strong subscriber base, with members watching an average of two hours of content per day. The bank holds an “overweight” rating and $1,025 price target for the stock.

Morgan Stanley also named Netflix a "top pick," expecting the company could “demonstrate relative resilience in a weaker global macro.” The analysts called the pullback in Netflix shares in the wake of President Donald Trump's tariff announcement on April 2 a “buying opportunity” for investors.

What signals are the Netflix options sending ahead of Q1 earnings?

The options prices predicted a ±10.59% post earnings move of Q1 2025. Over the last 13 quarters, the predicted move after earnings announcement was ±9.5% on average vs an average of the actual earnings moves of 12.0% (in absolute terms). This shows that Netflix tended to be more volatile than the options market predicted for the earnings stock price reaction.

There was a heavy concentration of call contracts at the $980 and $1000 levels expiring on April 17, 2025, which are respectively 6.72% and 8.9% above the stock's closing price on Friday.

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