Netflix Shares Climb After Blowout Earnings, Warns of Tariff Pressures

Netflix just handed investors a masterclass in resilience, reporting earnings that crushed expectations while dropping a bombshell about its future strategy. Let’s break down the numbers—and why Wall Street is both cheering and scratching its head.

The streaming giant’s Q1 2025 results were nothing short of a victory lap. Revenue soared to $10.54 billion, a 12.5% jump year-over-year, while EPS hit $6.61, obliterating estimates of $5.66. This isn’t just growth—it’s proof that Netflix’s playbook is still working. But here’s the twist: The company is now burying its once-sacred metric, subscriber growth, under a pile of financial jargon.

Netflix’s decision to stop reporting quarterly subscriber numbers has sparked a firestorm. Analysts argue this shift masks a slowdown in user additions, but the company insists it’s about focusing on what really matters: revenue and user engagement. With 301.6 million global subscribers (up 16% annually), Netflix now wants investors to care more about how much cash it’s pulling in, not how many new users it’s adding.

But here’s the catch: Tariff pressures are looming. Netflix’s earnings call included a stark warning about President Trump’s trade policies, which could trigger an economic slowdown. While Netflix claims its service-based model buffers it from physical goods companies, a recession could still crimp discretionary spending. The silver lining? Its ad-supported tier, now accounting for 55% of new sign-ups, offers a safety net for price-sensitive users.

The company’s strategic bets are bold. It’s doubling down on international content, live events (like boxing and NFL games), and gaming—a move to diversify beyond its core streaming business. CEO Reed Hastings has stepped back from his day-to-day role, signaling a leadership transition that could either be a strength or a risk.

So, is Netflix a buy? Let’s crunch the numbers:

• Revenue Growth: Netflix is projecting 15% growth to $11.04 billion in Q2, with a 33% operating margin—a sign of pricing power.
• Content Challenges: High-budget flops like Electric State (which underperformed) highlight execution risks, but hits like Adolescence keep subscribers hooked.
• Market Dominance: With 55% of new users choosing its cheaper, ad-supported plan, Netflix is capturing every dollar of consumer spending.

The biggest red flag? Slowing U.S./Canada growth, which dipped to 9% in Q1 (down from 15% in Q4). This region remains critical, as price hikes there have already maxed out. But Netflix is banking on plan mix improvements and delayed pricing impacts to fuel a Q2 rebound.

Final Verdict: Netflix is a buy—now. Why? Because its financial metrics are bulletproof, its ad strategy is a game-changer, and its content library is unmatched. Yes, tariffs and execution risks exist, but at $46 billion in revenue and a 33% operating margin, this isn’t a company in retreat.

Investors, this is a stock that just hit a home run—and still has a full lineup. The shift away from subscriber counts is gutsy, but with $10.54 billion in the bank, Netflix can afford to play the long game.

Final Score: Bullish, but keep an eye on those tariffs—and whether the U.S. market can regain its spark. For now, Netflix isn’t just streaming ahead—it’s rewriting the rules.

—Jim