Netflix Anticipates Q2 Growth with Pricing and Ad Strategies

Netflix is expected to report strong Q2 earnings with a 15% YoY revenue increase, driven by pricing and ad strategies. Analysts forecast an EPS of $7.09 and revenue of $11.06 billion. Wall Street's price targets vary, with an average target of $1,249.83 and a modest downside of 1.00%. GuruFocus' GF Value suggests a potential downside of 45.86%.

Netflix is set to report its second-quarter earnings on Thursday, July 17, after the stock market closes. The global streaming giant is expected to deliver a 15% year-over-year (YoY) revenue increase, driven by strategic pricing adjustments and the growth of its ad-supported tier. Analysts forecast an EPS of $7.09 and revenue of $11.06 billion for the quarter [2].

The company's first-quarter results, disclosed in April, saw a 13% YoY revenue increase and a 25% YoY increase in EPS, despite the absence of subscriber number disclosures. This trend is expected to continue into the second quarter, with revenue projected to reach $11.04 billion and EPS to reach $7.03, marking a 44.1% YoY increase [2].

Analysts have shown optimism about Netflix's prospects, with varying price targets and ratings. Evercore ISI analyst Mark Mahaney maintains an "outperform" rating with a $1,350 stock price target, citing factors such as positive takeaways from Netflix's mid-May upfronts and strong subscriber satisfaction trends [1]. Wedbush Securities analyst Alicia Reese also maintains an "outperform" rating with a $1,400 stock price target, expecting price increases to drive revenue growth in 2025 and the ad tier to drive higher revenue in 2026 [1].

BMO Capital Markets analyst Brian Pitz sees AI as an opportunity for Netflix, reiterating his "outperform" rating and boosting his stock price target from $1,200 to $1,425. He believes AI tools can enhance production workflows, expand creator capabilities, and drive user engagement [1]. Pivotal Research Group analyst Jeffrey Wlodarczak remains the biggest Netflix bull on Wall Street, raising his stock price target from $1,350 to $1,600, citing Netflix's dominant market positioning and underpenetrated global subscriber base [1].

The average Wall Street price target for Netflix is $1,249.83, with a modest downside of 1.00%. However, GuruFocus' GF Value suggests a potential downside of 45.86%, indicating a more cautious outlook [2]. Despite this, many analysts remain bullish on Netflix's prospects, driven by its strong content slate, pricing power, and the growth potential of its ad-supported tier.

References:
[1] https://www.hollywoodreporter.com/business/business-news/netflix-earnings-price-hikes-ai-1236316338/
[2] https://www.nasdaq.com/articles/should-you-buy-hold-or-sell-netflix-stock-ahead-q2-earnings