KEY POINTS
- Netflix reports second-quarter results on Thursday, 16 July, with the stock down about 19% this year.
- Wall Street expects earnings of US$0.79 per share on revenue of about US$12.5 billion, up roughly 13.5%.
- Here is the tension we see: major banks still rate it a Buy, yet they have all cut their price targets.
- The key numbers to watch are advertising revenue and profit margins, since Netflix stopped reporting subscriber counts back in early 2025.
Netflix (NASDAQ:NFLX) reports its second-quarter results on Thursday, and the setup is unusual. The stock has slumped roughly 19% this year, yet analysts still see it climbing about 50% from here. So is this a rare chance to buy a great company cheaply or a warning sign investors should heed? Here is how we read it ahead of the numbers.
What Wall Street Expects
The forecasts are solid but unspectacular. Analysts expect Netflix to report earnings of about US$0.79 per share, up roughly 10% from a year ago, on revenue of around US$12.5 billion, a 13.5% increase. That is healthy growth for a company of Netflix’s size, and it lands in a busy earnings season that has so far delivered more beats than misses.
Here is the twist that tells you a lot, though. In the run-up to results, three big banks, Citi, Goldman Sachs and Bernstein, all kept their Buy ratings but cut their price targets. When even the bulls trim their expectations, it signals genuine caution beneath the optimism. It is worth remembering that Netflix also missed earnings forecasts last quarter, so the pressure to deliver this time is real. In our view, that mixed message is the single most important thing for investors to understand right now.
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Why the Stock Has Struggled
The concerns are real and worth knowing. First, viewer engagement appears to be softening. Third-party data suggests Netflix’s monthly active users slipped around 3% from a year ago, and analysts believe recent price rises may have pushed some subscribers away.
Second, this year’s FIFA World Cup is a genuine distraction: when the world is watching football, it is not watching Netflix, which could dent subscriber growth in the short term.
Third, money has been flowing out of expensive media and software names and into semiconductor stocks, leaving Netflix without an obvious catalyst. Add in co-founder Reed Hastings stepping down as chairman and leaving the board at June’s annual meeting, the final step in a long leadership handover, and it is easy to see why sentiment cooled.
What to Watch on Thursday
Remember that Netflix no longer reports how many subscribers it has, having scrapped that disclosure back in early 2025. That may sound like a small detail, but it changes what matters. Investors must now judge the company on money, not member counts.
So focus on two things. First, advertising revenue: Netflix is targeting US$3 billion this year, and its ad-supported tier is becoming a genuine growth engine as subscriber growth slows. Any sign it is beating that goal would be a strong positive. Second, profit margins: management is targeting about 31.5% for the year, and this quarter carries peak content costs, so holding that line would be reassuring.
The Investor’s Takeaway: Buy Before Earnings?
So should you buy ahead of Thursday? Our take is patient rather than eager. Netflix remains a dominant business with a growing advertising arm and reliable cash generation, and after a 19% fall, the average analyst target implies roughly 50% upside. For long-term believers, that is a tempting setup.
But buying immediately before an earnings report is always a gamble, and the risks here are specific: soft engagement, a World Cup distraction, and peak content costs all landing in the same quarter. With even bullish analysts cutting targets, the safer path is to wait for the numbers rather than bet on them.
Our view: Netflix looks more interesting after this pullback than it has in a while, but we would want proof that the advertising business is delivering and margins are holding before committing. If Thursday’s report shows both, the case for buying gets much stronger, and you will not have missed much by waiting.
