Netflix Reports Tuesday: What Wall Street Expects
Streaming giant set to post Q4 results with analysts forecasting 28% earnings growth. Subscriber momentum and 2026 guidance in focus.
Netflix reports fourth-quarter earnings Tuesday afternoon, and the setup looks favorable for the streaming leader.
Wall Street expects earnings of $4.20 per share on revenue of $11.97 billion—gains of 28% and 17% respectively from the year-ago period. The stock has rallied 18% over the past three months, suggesting investors have already priced in a solid quarter. But the real test will be guidance for 2026.
Shares trade near $980, giving Netflix a $425 billion market cap. That's roughly 40 times trailing earnings—rich by traditional standards, but Netflix hasn't been a traditional media company for years.
Subscriber Math
Netflix crossed 300 million paid memberships in late 2025, cementing its position as the dominant global streamer. The question now is whether it can sustain that momentum or whether the ad-supported tier has pulled forward demand.
Analysts project 8.2 million net subscriber additions for Q4, which would bring full-year 2025 adds to roughly 32 million—well above the 13 million added in 2024. The crackdown on password sharing that began in mid-2023 continues to drive conversions two years later.
Regional performance will matter. North America generates the highest average revenue per user at around $17.50 monthly, while Asia-Pacific users average closer to $8. Management has emphasized long-term opportunity in emerging markets, but investors want to see the revenue mix hold.
The Ad Tier Evolution
Netflix's ad-supported plan launched in late 2022 as a defensive move. It's since become a growth engine.
The company doesn't break out ad tier subscribers specifically, but CFO Spence Neumann noted last quarter that ad-supported plans accounted for more than 40% of new sign-ups in markets where they're available. Ad revenue remains small relative to subscriptions—probably under $2 billion annually—but it's growing faster than the core business.
JPMorgan analyst Doug Anmuth estimates ad revenue could reach $5 billion by 2027 if engagement trends hold. That would make Netflix a meaningful player in the connected TV advertising market alongside YouTube and Roku.
What the Street Is Watching
Three items will drive the after-hours reaction:
Subscriber guidance: Management typically provides quarterly subscriber forecasts. Anything below 6 million for Q1 2026 would disappoint given seasonal strength from content releases.
Margin trajectory: Operating margin hit 29% in 2025, up from 20% in 2023. The company has guided toward "gradual improvement" in 2026, which the Street interprets as 30-31%. Any signal of faster expansion would push estimates higher.
Content slate commentary: Netflix has shifted toward fewer but bigger releases. The return of "Squid Game" season 2 in December likely drove strong engagement, but 2026 needs its own tentpole moments to maintain subscriber stickiness.
The Competitive Picture
Disney, Warner Bros. Discovery, and Paramount all reported streaming losses narrowing throughout 2025. That's good news for the industry but potentially bad news for Netflix's relative advantage.
Disney+ in particular has become more competitive, bundling with ESPN+ and Hulu at price points that undercut Netflix's standard tier. Amazon continues investing billions in Prime Video content. Apple TV+ just renewed its NFL deal.
Netflix's moat comes from scale—no other streamer matches its content library breadth or recommendation algorithm sophistication. But the days of easy subscriber growth are behind it. The stock's premium multiple requires continued execution.
Trading Considerations
Options markets imply a 7% move in either direction post-earnings, based on at-the-money straddle pricing. That's roughly in line with the average absolute move over the past eight quarters.
The stock sits 4% below its all-time high from early December. A beat-and-raise scenario could push shares above $1,000 for the first time. A guidance miss—particularly on subscribers—would likely test the 50-day moving average near $920.
For longer-term investors, the setup isn't dramatically different from three months ago. Netflix dominates a growing industry, generates substantial free cash flow, and trades at a premium that reflects those advantages. Tuesday's results will matter for near-term price action, but they're unlikely to change the fundamental bull case either way.
Earnings hit after the close on January 20, with management's video interview beginning at 4:45 p.m. Eastern.