Netflix has a lot to prove when it reports earnings Thursday as investors grapple with multiple catalysts putting pressure on the stock this year.
Netflix is scheduled to report fiscal second-quarter financial results after the stock market closes. Analysts surveyed by FactSet expect the streaming giant will post adjusted earnings of 79 cents a share on revenue of $12.58 billion.
"Given the recent pullback in shares, we believe investor sentiment remains muted and a beat and raise quarter could go a long way in assuaging several of these investor concerns," BofA Securities analyst Jessica Reif Ehrlich wrote on Tuesday. She rates the stock as a Buy with a $125 price target.
The company responsible for Stranger Things was recently a Wall Street winner. Shares hit a record closing high of $133.91 on June 30, 2025, as investors celebrated the streamer's consistent growth and competitive standing. This growth was buoyed by multiple business decisions Netflix made over the past several years, including limiting password sharing among users and introducing different pricing tiers.
Many investors are now worried that Netflix won't be able to continue on with the same level of growth. The stock has dropped 21% in 2026 to $73.78 compared with the S&P 500's 11% gain.
Ehrlich wrote that this decline reflects shareholder concerns about engagement trends, potential artificial-intelligence-driven disruption to content, and heightened competitive risks as fellow media companies look to merge.
Paramount Skydance beat Netflix in a bidding war to acquire Warner Bros. Discovery. That merger still faces regulatory approval, but if completed, would introduce a new competitive entity to the streaming space.
Netflix is facing more than just competition from fellow media companies. Social media sites like TikTok and YouTube are taking away viewing time from longer-form streaming content.
"The company is defensively responding with everything from publisher-produced clips and video podcasts to always-on channels. The core question investors should be watching is whether consumers actually want Netflix to become more like YouTube," Forrester VP and Research Director Mike Proulx wrote on Tuesday.
The stock is now cheap, trading at 19.9 times earnings expected over the next 12 months, way below its five-year average of 32.4 times forward earnings.
Ehrlich thinks even if earnings don't drive a stock rebound, shares will likely turn positive soon.
"Netflix shares will be fueled by continued positive subscriber and earnings momentum in addition to a long runway for advertising and live opportunities," she said. "Supported by its world-class brand, leading global subscriber scale, position as an innovator and increased visibility in growth drivers, we believe that Netflix's shares will perform well."
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 16, 2026 02:00 ET (06:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments