Netflix stock looked set to slide on Friday, despite a better-than-expectedquarterly earnings report. Sometimes, good isn’t good enough for investors.
Shares in the Stranger Things streamer slid 2.6% to $1,240 ahead of the opening bell. Futures tracking the benchmark S&P 500 were a touch higher.
The selloff came even though Netflix topped analysts’ quarterly profit and revenue targets and raised its revenue and operating margin forecasts for the year. Investors were likely a little concerned that the beat came from dollar weakness, which boosted revenue outside North America, rather than domestic strength.
Shares may also be priced for perfection right now, given they’re trading at a lofty 44 times expected earnings for the next 12 months, which is just off a three-year high.
Don’t be too down on the stock based on Friday’s move, though. This was still a solid set of results that showcased the strength of Netflix’s “flywheel” business model —whereby it can carry on growing its margins by reinvesting its profit into producing content, which in turn attracts more users.
The investment case remains unchanged, according to KeyBanc analyst Justin Patterson, who rates Netflix Overweight with a $1,390 price target that implies it can climb about 9% from its current level.
“Given Netflix’s track record of creating new hits, we are comfortable that viewership growth can continue and support future price increases and ad monetization,” he wrote in a research note published late Thursday, citing coming projects including Happy Gilmore 2, the new series of Stranger Things, and the coming live boxing match between Saul “Canelo” Alvarez and Terence Crawford.
The streamer’s ad business is on track, and dollar weakness should remain a tailwind, Patterson added.
Another analyst who remains bullish on the stock is Pivotal Research Group’s Jeffrey Wlodarczak, who stood by his Buy rating and Street-high $1,600 price target on Thursday. He thinks a slate of new shows in what the company has said will be its biggest year ever for fresh content will continue to attract viewers, and believes that the streamer still has room to grow globally.
Netflix shares are up 43% in 2025, compared with a 7.1% rise for the S&P 500. Judging by the reaction after earnings, analysts remain confident the streamer can continue to rack up gains.
