TLDR:
- Netflix reported Q1 earnings of $6.61 per share on $10.54 billion revenue, beating analyst expectations
- Stock climbed 2.8% in after-hours trading and is up 9.2% this year
- Company maintained its 2025 revenue guidance of $43.5-44.5 billion
- Q2 guidance projects earnings of $7.03 on $11 billion revenue, higher than analyst forecasts
- Analysts believe Netflix’s business model can withstand economic pressures from tariffs
Netflix (NFLX) reported first-quarter earnings on Thursday that exceeded Wall Street expectations, sending its stock higher in after-hours trading. The streaming giant appears well-positioned to navigate economic headwinds, including concerns about President Trump’s tariff policies.
The company posted adjusted earnings of $6.61 per share, easily beating analyst forecasts of $5.67. Revenue came in at $10.54 billion, slightly above the $10.5 billion expected by analysts surveyed by FactSet.
This performance pushed Netflix shares up 2.8% in after-hours trading. Before the earnings announcement, the stock had already gained 9.2% year-to-date.
Strong Guidance Boosts Investor Confidence
For the second quarter, Netflix expects earnings of $7.03 per share on revenue of $11 billion. This outlook tops analyst expectations for earnings of $6.25 per share on revenue of $10.9 billion.
The company also maintained its full-year 2025 revenue guidance of between $43.5 billion and $44.5 billion. Management stated there has been “no material change to our overall business outlook since our last earnings report.”
This steady guidance comes at a crucial time. Trump’s tariffs have raised concerns about consumer sentiment and inflation, with investors worried that rising prices might lead consumers to cut back on non-essential spending like streaming services.
In its letter to shareholders, Netflix mentioned that both operating income and revenue for the quarter exceeded expectations due to “slightly higher subscription and ad revenue.”
Resilience in Uncertain Times
The streaming company’s first-quarter operating income rose 27% from the prior year to $3.3 billion, while operating margins came in at 31.7%. Netflix increased prices for many of its global customers during the quarter.
Co-CEO Greg Peters addressed economic concerns during the company’s post-earnings video interview. When asked about potential impacts of economic uncertainty on the business, Peters said “there’s nothing really to note.”
He added: “We also take some comfort in the fact that entertainment historically has been pretty resilient in tougher economic times. Netflix specifically also has been generally quite resilient.”
One advantage for Netflix is its lower-priced ad-supported tier, which could help retain subscribers who need to cut back on spending but still want access to Netflix content. Peters mentioned that this lower-cost plan “gives us more resilience.”
This was the first quarter where Netflix didn’t disclose updated subscriber counts, a metric investors previously watched closely. In the previous quarter, the company had reported a record net gain of 18.9 million paid subscriptions.
Analysts Remain Bullish
Wall Street analysts seem confident about Netflix’s ability to weather economic challenges. Seaport Research Partners analyst David Joyce raised his price target to $1,060 from $1,025, suggesting an 8.9% upside from Thursday’s closing price.
Joyce stated, “The Netflix business model can withstand potential recessionary pressures due to its low-cost-per-hour-of-entertainment service that can serve as incremental replacement for consumer entertainment, travel, etc. if the economy experiences a broad spending pullback.”
Even more bullish was Pivotal Research Group analyst Jeffrey Wlodarczak, who hiked his price target to $1,350 from $1,250, representing the highest target on Wall Street.
“Even in a global recession scenario Netflix is likely to be highly resilient given the price-to-value of the service remains very attractive,” Wlodarczak noted. He added that Netflix’s advertising business is currently so small that it’s positioned for strong growth regardless of broader economic conditions.
Netflix mentioned in its report that its 2025 revenue guidance “assumes healthy member growth, higher subscription pricing, and a rough doubling of our ad revenue.”
While some analysts express concerns about potential tariff impacts on Netflix’s global production costs, the company’s strong financial position and diverse content strategy appear to be reassuring investors for now.
The streaming leader’s share price reflects this confidence, trading near all-time highs as it continues to demonstrate its ability to grow revenue and expand margins despite competitive and economic pressures.
The stock is rated a Moderate Buy based on 29 Buy ratings, 10 Holds, and one Sell, according to TipRanks. The average price target of $1,109.29 implies a 14% upside potential from current levels.
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