Netflix is still a Wall Street favorite - and a target for government regulators
Netflix's growing market power has attracted an unusual level of federal antitrust scrutiny.
Many top elected officials, Republicans and Democrats alike, are not big fans of Netflix.
Netflix should please the stock market when it reports earnings on Thursday - even if there is the usual "sell the news" response.
Analysts are bullish on the popular streaming service and expect a slight beat to the company's second-quarter earnings estimate. Consensus forecasts are for 13.5% annualized revenue growth to $12.57 billion, which was the Netflix forecast in the first quarter. Operating margin is the big one - up a tidy 32.6%.
This is where the friction lies. Operating margin includes ad revenue, which is rising fast and keeps the market bullish on Netflix. But that higher margin also includes higher subscription rates. When Netflix $(NFLX)$ raised the standard ad-free plan to $19.99 from $17.99 in late March, the incremental $2 per subscriber addition flowed largely to operating profit. The content is already there. The servers are already running. Customer service doesn't improve or change.
Barron's predicted in March that the latest price increase was definitely not the last. This has antitrust advocates in an uproar. They say Netflix's pricing power requires government intervention.
Netflix subscribers in Washington D.C. will see a black Mercedes Benz van with a sign on its side reading "Netflix is a monopoly." The campaign launched July 7 by the Demand Progress Education Fund. The group argued in an April letter to the Federal Trade Commission and the Department of Justice's antitrust division that the monthly Netflix bill for the standard package is up 29% since the start if 2025.
They're asking the FTC and DOJ to investigate whether Netflix is leveraging its position in the subscription video-streaming market in ways that harm competition, creators and consumers. Co-signers include the Open Markets Institute, an anti-monopoly advocacy and research group in Washington that tends to despise Big Tech, and the Writer's Guild. The guild also opposed Netflix's failed attempt to buy Warner Brothers Discovery $(WBD)$.
It is unclear if the FTC is looking into Netflix in any meaningful way, after the company dropped its Warner Bros. bid. But Netflix's growing market power has attracted an unusual level of antitrust scrutiny. During the DOJ's review of the Warner Bros. acquisition, investigators reportedly examined not only the merger's competitive effects but also broader questions about Netflix's leverage over filmmakers and content suppliers, which is where these letter-writers land.
Netflix's future
This raises the question of whether Netflix is stepping into the same regulatory crosshairs that targeted Alphabet $(GOOG)$ $(GOOGL)$, Amazon.com (AMZN), Apple $(AAPL)$ and Meta Platforms (META).
That brings us to Netflix's future. After bowing out of the Warner Bros. purchase, rumor has it that the Comcast $(CMCSA)$ spin-off might make for a future Netflix target. Recall that in October, Netflix co-CEO Greg Peters said the company wasn't looking for acquisitions. Netflix submitted its Warner bid about a month later.
Journalists covering the media business say Netflix is not looking, but investors will probably ask co-CEO Ted Sarandos on the earnings call if future acquisitions are on the table. I'd be curious if Peters chimes in on the question, having changed his mind on acquisitions not long ago.
Another clue will be the company's operating-margin guidance. If management raises its expected margin again, that reinforces the idea that Netflix is becoming more like a highly profitable media-services company rather than simply a streamer. This evolution - from Big Tech streaming platform and distribution network to media company - is why anti-monopoly advocates are paying closer attention. As are some leaders on Capitol Hill.
Sarandos's appearance at a February Senate Judiciary Committee hearing revealed what is obviously extremely weak bipartisan support for Netflix. Texas Republican Sen. Ted Cruz is as enamored with Netflix about as much as the company's main adversary, Massachusetts Democratic Sen. Elizabeth Warren. California congressional leader Adam Schiff and others are concerned about Netflix growing into the studio space. It's easy to imagine Netflix sourcing TV shows and films made from all over the world, with less reliance on California.
The Open Markets Institute and allied organizations say that Netflix has become so successful that regulators should begin treating it as a monopoly deserving of the treatment Meta Platforms received.
A recent survey by an anti-monopoly and fair-trade advocacy group, said 44% of Netflix subscribers are considering canceling their subscription.
Yet investors are unlikely to care about Demand Progress' roving billboards in Washington. There is some evidence that Netflix is shedding subscribers, or at least getting on their nerves. While Hudson Labs, an AI-driven financial-research firm in Toronto, predicts continued subscriber growth and retention, a recent survey by the Bull Moose Project, an anti-monopoly and fair-trade advocacy group, found 44% of Netflix subscribers are considering canceling their subscription. A third of the respondents did not even know prices were higher, probably because they don't check their credit-card bills. Subscriber engagement, a separate issue, was also showing some signs of wear and tear, the Wall Street Journal reported on July 9.
The Comcast spin-off could eventually open the door to Netflix getting back into acquisition mode, but the political path is increasingly difficult.
Netflix is still a Wall Street favorite. But many top elected officials are not big fans. That means Netflix has to keep its subscribers happy, which could take away from its ability to keep raising subscription rates going forward. But to keep investors happy, Netflix needs to extract more revenue per subscriber.
Wall Street thinks it can. But Main Street might be turning to Netflix's rivals. That's the investment reality and risk.
Kenneth Rapoza is an analyst for the Coalition for a Prosperous America, which represents U.S. producers and workers. He is a former journalist who has reported from Brazil and covered the BRIC economies. He holds no position in Netflix.
-Kenneth Rapoza
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July 14, 2026 18:11 ET (22:11 GMT)
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