TLDR
- Netflix reports Q1 2025 earnings on April 17, with expected revenue of $10.5 billion
- Company added 41 million subscribers in 2024, reaching 300 million total
- Recent price increases: Standard plan up $2.50 to $18, Premium plan now $25
- Market volatility and new tariffs creating uncertain investment climate
- Content costs likely to rise with expansion into live sports programming
Netflix is set to release its Q1 2025 earnings on Thursday, April 17, with analysts expecting a 12% revenue growth to around $10.5 billion and earnings of approximately $5.73 per share. The streaming titan closed 2024 with impressive numbers, adding 41 million new subscribers to reach a total of 300 million worldwide.
The company recently increased prices for its standard HD plan by $2.50 to $18 per month, while the Premium plan now costs $25 monthly. These price hikes, along with subscriber growth from its password-sharing crackdown and expanded ad-supported offerings, contributed to strong performance in 2024.
However, Netflix faces potential headwinds in 2025. Market volatility has intensified in recent months, with the tech-heavy NASDAQ down more than 15% in Q1. The Cboe Volatility Index has surged to 52.33%, compared to 17.93% at the year’s start.
Economic Pressures Mount
The broader market context poses challenges for Netflix and other tech stocks. President Trump’s new tariff policies have sparked market reaction similar to 2018-2019, but potentially more widespread. The administration recently announced 54% tariffs on Chinese goods and 20% on European products, prompting foreign investors to divest their portfolios.
Economic analysts suggest the US may be entering “continuous stagflation,” characterized by persistent inflation alongside low growth and high unemployment. This economic landscape has investors rethinking their strategies.
The emergence of DeepSeek, an AI program developed in China requiring less processing power than US alternatives, has further rattled tech investors. The market saw many take a bearish position, short-selling stocks to limit portfolio impact.
Changing Growth Patterns
Netflix’s strong 2024 performance may be difficult to sustain in the current environment. The company’s decision to stop reporting subscriber numbers has raised eyebrows, with some analysts suggesting this indicates Netflix anticipates slower growth this year.
Competition in the streaming space continues to intensify, which could lead to higher customer churn or slower acquisition of new users. This comes as Netflix expands into more expensive content areas.
“We will also be closely watching Netflix’s margins for the quarter,” noted the Trefis Team. “Netflix’s content costs are set to rise as it increasingly ventures into live sports programming, such as NFL games and WWE wrestling, which are typically higher-cost businesses.”
Historical Performance Insight
Looking at Netflix’s post-earnings stock performance provides some context for what might happen after this week’s announcement. Over the past five years, the stock has shown positive one-day returns following earnings about 37% of the time.
However, this percentage increases to 55% when considering only the last three years of data. When the stock does rise after earnings, the median gain has been 11%, while the median decline has been 6.7% when the stock falls.
Netflix currently maintains a market capitalization of $404 billion. Its revenue over the trailing twelve months stands at $39 billion, with $10 billion in operating profits and $8.7 billion in net income.
Despite market uncertainty, Netflix remains popular among billionaire investors. According to recent data, 25 billionaires hold Netflix stock with a combined investment value of $12.74 billion, ranking it second among “kid-friendly” stocks favored by billionaire investors.
The company’s vast library of content for children of all ages, including popular franchises, educational programming, and parental control features, makes it an attractive investment for those focused on family-friendly businesses.
For parents looking to secure their children’s financial future, companies like Netflix represent potential long-term investments. A MorningStar report highlights that stock investments benefit from compounding returns, meaning earlier investments have more time to grow exponentially.
As Netflix prepares to announce its latest quarterly results, investors will be watching closely for signs of how the streaming leader is navigating the current market turbulence and positioning itself for future growth in an increasingly competitive landscape.
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