Netflix’s third-quarter results have been released, along with the first Wall Street verdict on what it means for the streaming giant and its stock. Most experts went into the earnings report with a bullish mindset, despite warnings that the company’s rise in market value may require some patience before the stock rises further.
Netflix, led by co-CEOs Ted Sarandos and Greg Peters and executive chairman Reed Hastings, had 282.72 million global subscribers at the end of September. . As expected, the net addition for the quarter was 5.07 million, lower than the 8.76 million increase in the same period last year.
Original content launching on the streamer in Q3 includes Emily in Paris Season 4, The Perfect Couple, Beverly Hills Cop: Axel F, and The Good Girl’s Guide to Murder. , including the fourth and final season of The Umbrella Academy.
And regarding the current fourth quarter, management touted this late Thursday: “We’re excited to finish the year on a high with a great fourth quarter, including Season 2 of The Squid Game, the Jake Paul vs. Mike Tyson fight, and two NFL games on Christmas.”For this reason, Netflix predicted that the number of paid net additions in the fourth quarter would be higher than in the third quarter.
As a result, various analysts maintained their ratings on the company, and some even raised their stock price targets on the streamer. Netflix stock soared in premarket trading Friday, rising more than 6% to more than $730. But again, there were some warnings that the stock might not be able to continue rising.
For example, TD Cowen analyst John Blackledge reiterated his rating on Netflix stock as a “buy.” He recently raised his price target by $45 to $820, and raised it further to $835 after the earnings update. “While we have raised our lower-end forecasts in response to our third-quarter forecast, we have also made minor adjustments to our revenue, operating profit, and earnings per share forecasts for 2024 and beyond,” he said.
Evercore ISI analyst Mark Mahaney also reiterated his post-earnings rating of the stock as “outperform” and raised his price target by $25 to $775. These are the financial results “following the beat and raise in the third quarter.” ”
He also noted “key bullish views” on the outlook for the fourth quarter, including “record high operating margins (30%) that appear to be fairly sustainable,” and “very strong “Thanks to this content, it suggests a solid upside to the street sub forecast.” ” and “There have been some partial price increases and we believe there will be more.”
BMO Capital Markets’ Brian Pitts was among the analysts who raised his price target for Netflix by $55 on Friday, from $770 to $825. He also reiterated his “outperform” rating in a report entitled “Advertising monetization theory remains intact and effectively executed.”
Pitts said there were some positives, including “2025 revenue growth forecast of 11% to 13% (vs. BMO’s 11.9%), which exceeds expectations” and “high confidence that advertising revenue mix will be 10% in 2026.” emphasized the points. -In-class co-CEO. The analyst also asserted that Netflix’s estimated $18 billion in content spending in 2025 “needs to capture growing users and limit churn.” And Pitts concluded: “Netflix is a major beneficiary of the $150 billion in linear ad spending that will continue to move online (we estimate $20 billion over the next three years).”
Guggenheim analyst Michael Morris also remains optimistic, having raised his 12-month price target from $735 to $810 before the latest earnings release. In response to the report, he maintained his Buy rating on Friday, emphasizing the main reason for his bullishness in the note’s headline: “Expand content to drive further growth.”
William Blair analyst Ralph Schuckert on Friday similarly stuck with an “outperform” rating for Netflix, without setting a price target. “Better-than-expected profitability boosts full-year margin forecasts,” he said in the report’s headline. “Profit margin expansion will continue until 2025”
His big-picture conclusion is: “We remain optimistic that both this new (advertising) tier and paid sharing will provide tailwinds to (revenue) in the medium term. Overall, Netflix is looking to remain a long-term streaming winner. “We remain in a favorable position.” He also maintained that the planned subscription price increases “will ultimately flow into a model that satisfies investors.”
Pivotal Research Group analyst Jeff Brodarczak remains the biggest bull on the Netflix market, further raising his financial forecast and market-high price target on Friday from $900 to $925. We reiterated our “buy” rating. “This is what victory looks like,” said the title of his report.
“Netflix slightly beat consensus third-quarter subscriber growth, better-than-expected third-quarter revenue growth…and delivered third-quarter free cash flow that far exceeded expectations, leading to a 24-year ‘s revenue, operating margin, and free cash flow outlook,” the analyst highlighted. “Furthermore, management issued 2025 sales and operating income growth forecasts, which were exactly in line with our and consensus expectations. However, the operating income growth forecast was conservative. I think it is highly likely.”
Wrodarczak concluded: “We continue to expect Netflix to be able to generate solid subscriber growth and ARPU growth (price hikes and continued advertising growth, partially driven by lower ARPU in developing markets). This should continue to expand margins and drive solid revenue growth.
Bernstein analyst Laurent Yun remains more cautious than most with a “market perform” rating, but raised his price target by $155 to $780. “Is it smooth sailing from here?” he asked in the title of Friday’s report.
“There was some concern regarding net subscriber numbers in the third quarter due to softening content and the discontinuation of paid sharing initiatives,” he said. “Although user growth was certainly disappointing, mainly due to Latin American influence, the worst fears are behind us and positive comments are encouraging.”
Yun concluded by summarizing his current view on Netflix stock: Given the latest guidance and confidence around ’25 and implied numbers for ’26, we see further upside potential. ”He emphasized that: “We cannot think of a realistic case for bears in the short term and our sentiments remain unchanged. Enjoy streaming.”
In contrast, benchmark analyst Matthew Harrigan remains a Netflix bear, maintaining his sell rating, despite raising his price target by $10 to $555. “There is no denying that streaming excellence is overvalued, especially in markets with momentum, especially as paid sharing benefits mature,” he summed up his argument in the report’s headline.
“While likely not in the short-term, over the medium-term, membership growth risks and our forecasts may be tilted to the downside,” he warned. “Benchmark assessments and underlying predictions indicate that, like Netflix itself, increased competition in video streaming and consumer activity will increasingly shift toward media other than long-form video content (e.g. TikTok, AR, short-form YouTube videos, etc.) We also adapt to this environment of recognizing lopsidedness, but recognizing significant growth.” ”
Moffett Nathanson analyst Robert Fishman expressed a contrary view on the current state of Netflix and its stock. “For a company famous for sending Blockbusters to their graves, this was an undisputed blockbuster,” he wrote. “We did so in the face of what was affected by the strike,” and did so while increasing profit margins.
“However, it is questionable whether this momentum will continue next year, as much of the subscriber growth appears to represent improved monetization of the existing user base,” he cautioned.
Yes, the company’s advertising business is still in its infancy, and the growth drivers still remain. “Another lever at the company’s disposal is pricing, and while the company likely still has room to grow, the stagnation in total hours watched per subscriber means that pricing “This could mean that growth is also stagnant,” Fishman said. “The company says it sees an increase in time per ‘owner household member’ (excluding users who previously shared passwords) year-over-year, but It’s hard to say how much engagement there is. Sharers are factored into the value equation for paid subscribers.”
What does that mean? “Estimated cash flow yield in 2026 is 4%, with proprietary guidance suggesting earnings will slow into 2025 (from 15% growth this year to 11-13%)” “Netflix’s stock price is extremely expensive for a company that does so,” Fishman said. “The company trades at a higher price/free cash flow multiple (27.9x) than many other large tech companies, including some of the fastest growing companies.” For example, one of his charts showed that Meta was 24.9x, Amazon was 20.5x, and Snap was 19.9x.
Netflix’s latest results also renewed interest beyond traditional Wall Street analysts. “We estimate that Netflix currently accounts for nearly 10% of total spending on video services in the U.S.,” Madison & Wall principal Brian Wieser said in a note. “This equates to approximately 8% of the total time spent watching content, indicating that consumers place a relatively high value on Netflix compared to alternative services.”
He also highlighted further advertising trends. “In the past quarter, 50 percent of sign-ups in the advertising market selected an advertising plan, an acceleration from recently published numbers of 40 percent in each of Q1 2024 and Q4 2023. “This shows that there is,” the experts wrote. . “In terms of the number of households subscribing through the ad-supported tier, Antenna data analysis shows that 12 percent of U.S. subscribers, or approximately 7 percent of U.S. TV households, subscribe to this plan, which is That’s about double last year’s levels. To the extent that’s true, nearly all of the service’s growth in the U.S. since the tier’s launch about two years ago has come from ad-supported members. ”
