Advertising is steadily emerging as one of the key drivers of growth for Netflix. If the company successfully executes its strategy to double advertising revenue by the end of 2025, NFLX shares could potentially reach 1,550 USD.
The Q2 2025 financial results of Netflix, Inc. (NASDAQ: NFLX) once again exceeded expectations. Revenue rose by 16% year-on-year, while earnings per share increased by 47%, partly driven by favourable exchange rate movements. The company raised its full-year guidance for both revenue and operating margin, expressing confidence in the potential of its ad-supported subscription and upcoming content slate.
One of the key achievements was growth in the advertising segment, underpinned by the launch of its proprietary Ads Suite platform. Management expects advertising revenue could double as early as 2025. However, a substantial part of the success was attributed to currency effects rather than operational performance, raising questions about the sustainability of this growth. As a result, despite the strong financial figures, investor reaction was negative. Following the earnings release, NFLX shares declined, as the market awaits more apparent signs of internal momentum and successful long-term monetisation. Another source of pressure is the stock’s elevated valuation – Netflix is currently trading at a forward P/E of around 37, nearly double its three-year average, prompting greater investor caution.
This article provides an overview of Netflix, Inc., including reports for Q2, Q3, and Q4 2024 as well as Q1 and Q2 2025. It also presents a technical analysis of NFLX shares, which forms the basis for the Netflix, Inc. share price forecast for 2025.
About Netflix, Inc.
Netflix, Inc. was founded on 29 August 1997 by Reed Hastings and Mark Randolph. The company was initially in the business of delivering DVDs on a subscription basis. Clients could order a film through the website and receive it by post. In 2007, Netflix launched a streaming service, allowing users to watch movies and TV shows online via the internet.
The transition to live streaming was pivotal in the company’s history. Netflix began actively expanding its content library to include licensed films, series, and original projects. By July 2024, Netflix had 277 million subscribers worldwide, making it the largest streaming platform.
Image of Netflix, Inc.’s company name
Netflix, Inc.’s key financial flows
Netflix’s revenue mainly comes from streaming services, advertising, and other sources. The main components are outlined below:
- Subscription fees: this is Netflix’s primary revenue stream, which is divided into ad-supported and ad-free subscriptions
- Advertising revenue: payments from companies for placing advertisements
- Content licensing and distribution: revenue is generated from providing paid licences for Netflix’s original and purchased content to other platforms and TV channels. This segment also includes income from partnerships with telecommunication providers, cable companies, and other distributors that offer Netflix as part of their packages
- Other revenue streams: sales of merchandise related to Netflix series and films (e.g. toys, apparel, and collectables). The company has also started investing in the gaming industry by offering mobile games based on its intellectual property, creating additional opportunities for revenue growth
Most of Netflix’s revenue is derived from streaming subscriptions, while advertising, licensing, and other business segments offer additional potential for income growth.
Netflix, Inc. Q2 2024 report
Netflix released its Q2 2024 report on 18 July. Below is a comparison of its results with the same period in 2023:
- Revenue: 9.56 billion USD (+17%)
- Net income: 2.15 billion USD (+44%)
- Earnings per share: 4.88 USD (+48%)
- Operating profit: 2.60 billion USD (+44%)
- Operating margin: 27.2% (+490 basis points)
- Total subscribers: 277.65 million (+16%)
Although the company continues to increase the number of subscribers quarter over quarter, this growth is gradually slowing. The increase in memberships in Q4 2023 surpassed previous figures by 13.13 million, followed by 9.32 million in Q1 2024 and 8.05 million in Q2 2024. Netflix is facing challenges in identifying new catalysts for subscriber growth. The company is now attracting new subscribers by addressing password sharing and reducing the cost of ad-supported subscription plans. Market participants are sensitive to these statistics; a look at the stock behaviour when Netflix reported a loss of 200 thousand subscribers in Q1 2022 reflects this, causing the share price to fall by over 30%, continuing its decline.
Netflix’s management plans to stop publishing subscriber statistics from 2025 onwards to mitigate these challenges and focus investors’ attention on revenue per user, total revenue, and operating margin.
Amid slowing membership growth, the company is exploring new growth drivers, with advertising viewed as a potential source. Netflix’s management has noted that advertising is becoming increasingly significant to the company’s operations. However, building this business from scratch will take time, meaning it is unlikely to become the primary driver of revenue growth in 2024 and 2025.
Netflix forecasts 14% year-on-year revenue growth in Q3 2024, although a lower increase in paying users is expected compared to the same period in 2023. At the same time, no changes are anticipated for the global average revenue per user.
Based on the 2024 results, revenue is projected to rise by 14-15%, compared with the earlier forecast of 13-15%, while the operating margin is expected to reach 26%, up from the earlier estimate of 25%. The company’s goal remains to increase operating profit.
Netflix, Inc. Q3 2024 report
On 17 October, Netflix published its Q3 2024 report. Below is a comparison of its data with the corresponding period in 2023:
- Revenue: 9.82 billion USD (+15%)
- Net income: 2.36 billion USD (+41%)
- Earnings per share: 5.40 USD (+20%)
- Operating profit: 2.94 billion USD (+25%)
- Operating margin: 29.6% (+720 basis points)
- Total subscribers: 282.7 million (+14%)
Co-CEO Theodore Sarandos noted that content production is recovering after last year’s strikes in Hollywood, with series rebounding more rapidly than films. The company’s advertising business showed significant growth, with the number of subscribers to ad-supported plans increasing by 35% from the previous quarter. More than half of the new users in regions with ad services chose this package option. However, the company emphasised that effective ad monetisation will take time, and this segment will not become a primary revenue stream in the near term.
In Q4 2024, Netflix projected earnings per share of 4.20 USD, with revenue expected to reach 10.12 billion USD, representing annual revenue growth of 15%. The total number of subscribers was forecast to increase by 8.2 million, reaching approximately 290.9 million.
The company anticipated that its advertising revenue would double in 2025, driven by a 150% increase in advertising commitments secured during 2024. Despite the upbeat forecast, Netflix noted that advertising was not expected to become a primary revenue driver in the near term. This guidance highlighted the company’s ongoing efforts to strengthen its position in the streaming market and diversify its revenue streams.
Netflix, Inc. Q4 2024 report
Netflix released a strong Q4 2024 report on 21 January. Below is a comparison of its results with the corresponding period in 2023:
- Revenue: 10.24 billion USD (+16%)
- Net income: 1.87 billion USD (+99%)
- Earnings per share: 4.27 USD (+102%)
- Operating profit: 2.27 billion USD (+51%)
- Operating margin: 22.2% (+530 basis points)
- Total subscribers: 301.6 million (+15%)
In its commentary on the Q4 2024 results, Netflix’s management expressed satisfaction with the company’s strong financial performance and strategic progress. They highlighted a 16% year-on-year increase in revenue and a 102% rise in EPS, both of which exceeded market expectations. The quarter also saw a significant increase in subscriber numbers, reaching 301.6 million, driven by compelling content, including major releases such as the Jake Paul vs Michael Tyson fight and NFL games.
Management emphasised the importance of continued investment in original content, which has helped boost user engagement and reduce subscriber churn. Additionally, plans were announced to expand Netflix’s proprietary advertising platform to a further twelve countries, aiming to improve margins and monetisation by reducing reliance on intermediaries. Netflix’s management reiterated its confidence in the company’s strategic direction, highlighting that investment in content and the development of advertising technologies are key drivers of growth and long-term success.
For 2025, Netflix provided guidance indicating continued optimism. The company raised its full-year revenue forecast to approximately 44.00 billion USD – an increase of 0.50 billion USD compared to previous estimates. The operating margin was projected at 29%, which is one percentage point higher than earlier expectations. Management also referred to plans for further investment and expansion across gaming, advertising, and live streaming, aiming to enhance the platform’s appeal to subscribers.
Netflix, Inc. Q1 2025 report
On 17 April, Netflix released its Q1 2025 report, again demonstrating strong financial performance. Below is a comparison of its data with the corresponding period in 2024:
- Revenue: 10.54 billion USD (+13%)
- Net income: 2.89 billion USD (+24%)
- Earnings per share: 6.61 USD (+25%)
- Operating income: 3.34 billion USD (+27%)
- Operating margin: 31.7% (+360 basis points)
Netflix demonstrated impressive resilience amid economic challenges, including concerns about US trade policy. The company reported a 13% year-on-year revenue increase to 10.5 billion USD and a rise in net income to 2.9 billion USD. CEO Greg Peters noted that Netflix has historically been a stable company, even during economic downturns, without significant changes in customer behaviour.
A notable development was Netflix’s strategic shift towards advertising. The ad-supported plan accounted for 55% of new subscriptions in regions where it is available, highlighting the successful development of new revenue streams. The company plans to double its advertising revenues in 2025 through its proprietary ad platform.
For Q2 2025, Netflix projected revenue of 11.04 billion USD, reflecting steady growth driven by increases in both subscriptions and advertising revenue. The company maintained its annual revenue forecast within the range of 43.5 to 44.5 billion USD and raised its operating margin target to 29% (up from 28%). These projections emphasise Netflix’s confidence in its strategy and its ability to navigate economic challenges.
In its Q1 2025 earnings commentary, Netflix set an ambitious target to reach a market capitalisation of 1 trillion USD by 2030. Ted Sarandos confirmed that this is not an official forecast or financial guidance. To achieve this target, Netflix planned to double its 2024 revenue (which amounted to 39 billion USD) by 2030, with a primary focus on expanding its advertising segment. The company expected to generate 9 billion USD from global advertising sales by leveraging the growing popularity of its ad-supported subscription tier. Additionally, Netflix invested in its advertising technology platform, launched on 1 April 2025, which is designed to enhance its advertising capabilities and drive further revenue growth.
Netflix’s long-term growth strategy, including the goal of reaching a 1 trillion USD market capitalisation by 2030, demonstrates its commitment to innovation and considered development.
Netflix, Inc. Q2 2025 report
On 17 July, Netflix published its Q2 2025 results, once again exceeding expectations. Below are the key figures compared to the same period in 2024:
- Revenue: 11.08 billion USD (+16%)
- Net income: 3.13 billion USD (+46%)
- Earnings per share: 7.19 USD (+47%)
- Operating income: 3.77 billion USD (+45%)
- Operating margin: 34.1% (+690 basis points)
Netflix delivered strong Q2 2025 results, with revenue rising 16% year-on-year to approximately 11.08 billion USD and a sharp increase in net income and earnings per share of 46-47% to 3.13 billion USD (7.19 USD per share), beating analyst expectations.
Advertising is emerging as a new growth driver for Netflix. The company is actively developing its proprietary advertising platform, Ads Suite, which includes targeting, programmatic buying, and interactive formats. Netflix confirmed it expects to double advertising revenue in 2025, a segment that could significantly diversify its income streams. Content remains a core strength. Although the company no longer discloses subscriber numbers, it reported high user engagement: the third season of Squid Game reached 122 million views and releases such as Stranger Things and other flagship titles are expected in the second half of the year. This supports increased viewing time and subscriber retention. Additionally, the implementation of AI is helping to improve margins. Management expects the full-year operating margin to be around 30%. The utilisation of AI in content production and personalised recommendations enables cost reductions and increased engagement.
Despite Netflix’s strong business model and leadership in the streaming industry, macroeconomic risks should be considered. Netflix shares currently trade at a premium relative to their three-year average price. For example, whereas investors previously paid 20 USD for 1 USD of company earnings, they now pay nearly 40 USD. At such a high valuation, Netflix must effectively monetise advertising and content to convince investors of its fair value. Otherwise, market participants may lose confidence in the company’s growth potential, which would negatively impact its share price.
For Q3 2025, management forecasts revenue of 11.53 billion USD, above the consensus estimate of 11.31 billion USD. Content expenses are expected to rise in Q3 and especially in Q4, including costs associated with sports streaming. However, the company still anticipates margin growth both quarter-on-quarter and year-on-year.
Q2 2025 reaffirmed Netflix’s key strengths: compelling content, a rapidly growing advertising business, and effective technology utilisation. However, the high share valuation indicates that the market has already priced in significant success. If investors believe in Netflix’s ability to double advertising revenue, increase engagement through AI, and continue producing hits, there remains potential for share price appreciation. Conversely, if concerns about dependence on currency factors or overvaluation persist, the current correction may provide an opportunity to wait for a more attractive entry point.
Investor reaction to the Q2 2025 report was mixed. At first glance, the results were strong, with revenue and earnings per share exceeding expectations, and management raising the full-year forecast. However, despite this, shares fell by 5% the day after the report’s release, as a substantial part of the earnings growth was attributed not to operational improvements but to a favourable currency effect – a weakening US dollar.
Moreover, ahead of the report, shares had already risen significantly and traded at a high premium – approximately 44 to 47 times forward earnings – nearly double the average level over the past three years. This means the market had already priced in very high expectations. Consequently, following the report, some investors chose to take profits while shares were near their historical peak.
Expert forecasts for Netflix, Inc. stock for 2025
- Barchart: 27 out of 45 analysts rated Netflix shares as a Strong Buy, three as a Buy, and 15 as a Hold. The maximum target price is 1,600 USD
- MarketBeat: 24 out of 36 experts issued a Buy rating, 10 recommended Hold, and two advised Sell. The maximum target price is 1,600 USD, and the minimum is 680 USD
- TipRanks: 26 out of 36 professionals recommended Buy, and 10 suggested Hold. The maximum target price is 1,600 USD
- Stock Analysis: 11 out of 33 experts rated the shares as a Strong Buy, 14 as Buy, and eight as Hold. The maximum target price is 1,600 USD
Expert forecasts for Netflix, Inc. stock for 2025
On the weekly chart, Netflix shares had been trading within a steady upward channel until May 2025. In May, the stock broke above the upper boundary of this channel and by July had reached a new all-time high of 1,340 USD. Such a breakout typically signals a continuation of the upward trend, with the potential upside approximately equal to the width of the previous channel. In this case, the next target for Netflix shares is around 1,550 USD. Based on recent NFLX stock performance, the following scenarios for the stock’s movement in 2025 are possible: The base-case forecast for NFLX shares anticipates a rebound from the channel line, which now serves as a support level, followed by further growth towards the resistance level at the all-time high of 1,340 USD. A breakout above this level could catalyse continued growth towards the primary target of 1,550 USD. The alternative forecast for NFLX stock assumes a breakdown below the support level at 1,180 USD, which would result in a return to the previous ascending channel. In this scenario, a deeper correction could follow, with prices potentially falling towards the trendline near 1,000 USD. Thereafter, the upward trend could resume, with the target once again being the upper boundary of the channel at 1,340 USD.
Netflix Inc. stock analysis and forecast for 2025
Risks of investing in Netflix, Inc. stock
Investing in Netflix stock carries risks and potential challenges for the company. These include:
- Competition: major competitors with streaming services such as Disney+, Amazon Prime Video, HBO Max, and Apple TV+ are expanding their content libraries and subscriber bases. The company also faces competition from local market players who may offer more relevant content to regional viewers
- Content costs: producing high-quality original content requires a significant investment. Inflated costs may impact the company’s profitability Market saturation – growth in subscriber numbers may slow down in countries with high streaming service penetration
- User reaction to ads: although users are currently accepting of ads and subscribing to the ad-supported plan, a shift in user sentiment could significantly harm the company’s financial position
- Advertising model efficiency: it remains unclear whether Netflix’s advertising model will be successful and capable of compensating for the lost income from traditional subscriptions Despite considerable growth opportunities and innovations, investments in Netflix involve multiple risks. Therefore, all the relevant factors should be considered when making investment decisions.
Source: Roboforex
