Ahead of its fourth-quarter earnings results on Tuesday, analysts say Netflix’s streaming dominance is still intact.
Maybe, for some, Netflix’s stock has gotten a little too expensive. Maybe some reviewers, initially, were reluctant to get behind the second season of “Squid Game.” But ahead of the platform’s fourth-quarter results on Tuesday, analysts say its dominance in the streaming wars is still intact.
Live broadcasts — whether it’s boxing, WWE or the NFL — will continue to remain central to its plans to stay that way this year. But so will things that viewers might be less enthusiastic about, like price increases and ads.
“We believe 2025 revenue will be supported by healthy organic [and] secular growth, ramping advertising contribution, [and] price increases,” JPMorgan analysts said in a recent note.
“Netflix is increasingly focused on sports entertainment, events, [and] shoulder content, [and] we expect a bigger push into live sports as negotiating leverage shifts in NFLX’s direction,” they added later.
Netflix
NFLX
will report earnings in the wake of a nearly 80% gain in its stock price over the past 12 months, and as Hollywood and its rivals struggle and a new Trump administration takes office. While the stock has pulled back a bit over the past month, analysts have stayed positive.
“Netflix has established a virtually insurmountable lead in the streaming wars,” Wedbush analysts said in a research note last week. “Netflix can retain its moat while competitors try to replicate its business model.”
“Even as Netflix has lapped the password-sharing crackdown, we expect its advertising tier to drive revenue growth for several years,” they continued. “So far, the introduction of the ad tier has limited churn, lowering pressure on adding new subscribers, with at least 30 million accounts converting to the ad tier in the past six months.”
They said that as Netflix takes on more live events, refines its advertising services and leverages new partnerships, they expect the platform’s ad-supported plans to be its main sales-growth driver by 2026.
Still, the JPMorgan analysts said, a tougher foreign-exchange backdrop could weigh on financials. And the entertainment industry, more broadly, has pulled back, as investors press for profits. Work remains tougher to secure following 2023’s writers and actors strikes. Gauging the full impact on the industry from this month’s fires in Los Angeles, which have displaced thousands of people, will take time.
As the industry tries to nurture the bottom line, it has consolidated, a trend some analysts say could continue under President-elect Donald Trump. But even as Netflix’s competitors try to get bigger, some analysts expect the impact to be minimal.
“Even if Hollywood can consolidate under Trump DOJ/FCC, this would just mean less competition for content creators and better NFLX margins,” Oppenheimer analysts said in a note last month.
This week in earnings
Forty-three S&P 500 companies will report this week, including six from the Dow, according to a FactSet report released on Friday.
3M Co.
MMM
, homebuilder D.R. Horton Inc.
DHI
, Johnson & Johnson
JNJ
and Procter & Gamble Co.
PG
are among those reporting results during the week. Earnings from credit-card providers Discover Financial Services
DFS
and Capital One Financial
COF
, which is trying to buy Discover, as well as American Express Co.
AXP
, will offer more insight into consumer spending, after a wave of bank earnings last week.
The calls to put on your calendar
Airlines: Delta Air Lines Inc.
DAL
this month forecast a strong year ahead, lifted by demand for premium-class seats and other upsells. Now, we’ll get results from rivals United Airlines Holdings Inc.
UAL
on Tuesday and American Airlines Group Inc.
AAL
on Thursday. Some analysts expect the trends described by Delta executives to carry over to its legacy-carrier peers as well.
“As the rest of the airlines prepare for earnings reporting, we see the same contrasting themes continue to unfold: We think network carriers should continue to outperform due to premium revenues, the rebound in corporate travel, and growth in Atlantic routes,” BofA analysts said in a note last week upgrading shares of American.
The number to watch
Railroad sales, volumes: Any chance the nearly three-year “freight recession” will end this year? Some analysts think it’s possible, after caution — and inflation — reverberated through global economies and weighed on what people make, buy and get shipped to their doorsteps. Results last week from trucking and logistics provider J.B. Hunt Transport Services Inc.
JBHT
raised investors’ concerns. Results on Thursday from rail giants CSX Corp.
CSX
and Union Pacific Corp.
UNP
will help fill in the gaps.
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