Netflix Just Showed Why It’s a Must-Own Stock for the Trump Tariff Era

Netflix’s Q1 2025 earnings report has reinforced its position as a resilient, high-margin entertainment giant capable of thriving even as President Trump’s trade policies roil global markets. By focusing on pricing power, advertising innovation, and a geographically diversified revenue stream, Netflix has insulated itself from the tariff-driven volatility affecting industries tied to physical goods. Here’s why investors should take note.

The Numbers: Revenue Growth Amid Tariff Uncertainty

Netflix reported revenue of $10.54 billion for Q1 2025, a 13% year-over-year increase, driven by subscription price hikes and the rollout of its in-house ad tech platform. Net income surged to $2.89 billion, with operating margins hitting a record 31.7%—a stark contrast to manufacturers and retailers grappling with tariff-induced cost pressures.

The company’s decision to stop disclosing quarterly subscriber counts underscores its confidence in shifting focus to revenue and profitability. This move aligns with its strategy to prioritize monetizing its existing user base through ads and higher pricing.

Netflix’s stock has risen 9% year-to-date in 2025, while its operating margin has expanded by nearly 3 points since 2023, reflecting its cost discipline and pricing power.

Why Tariffs Don’t Phase Netflix

President Trump’s trade policies have raised costs for industries reliant on imported goods, from autos to electronics. But Netflix, as a subscription-based digital service, operates in an untaxed sector. Its resilience stems from three pillars:
1. Global Revenue Mix: Over half its revenue comes from outside the U.S., reducing exposure to any single market’s economic headwinds.
2. Services Model: Unlike manufacturers, Netflix doesn’t face tariff-driven disruptions in supply chains or logistics.
3. Entertainment’s Recession Resilience: Co-CEO Greg Peters pointed to historical data showing streaming’s stability during downturns. “Entertainment is a discretionary spend, but it’s also a necessity for escapism,” he said.

Analysts at Oppenheimer echoed this, calling Netflix the “cleanest story in media” amid tariff risks.

The Advertising Pivot: A $9 Billion Opportunity

Netflix is doubling down on ads to offset slowing subscriber growth. Its new in-house ad platform, launched in the U.S. in April 2025, aims to double advertising revenue this year and hit $9 billion annually by 2030. This strategy is already bearing fruit: ad-supported subscribers now account for 20% of U.S. subscribers, and the $7.99 tier has attracted price-sensitive users without cannibalizing premium subscriptions.

Netflix’s ad-supported tier has grown steadily since its $6.99 launch in 2024, now representing 20% of U.S. subscribers—a testament to its appeal in cost-conscious markets.

Valuation and Risk Considerations

Netflix’s $43.5–$44.5 billion full-year revenue guidance for 2025 implies 15% growth in Q2, supported by hits like Adolescence and Back in Action. With an operating margin target of 33.3%, the company is on track to meet its long-term goal of a $1 trillion market cap.

Risks remain, including potential ad fatigue and broader economic downturns. However, Netflix’s low-cost tiers and time-sensitive content (e.g., event-driven series) position it as a “staycation alternative” during recessions. Analysts at Loop Capital note that $7.99 ad-supported plans are sticky, with churn rates lower than premium tiers.

Conclusion: A Steady Hand in a Volatile Market

Netflix’s Q1 results and forward guidance make a compelling case for its resilience in the tariff era. By leaning on pricing, advertising, and global diversification, it has built a moat against macroeconomic headwinds.

The data speaks plainly:
- Revenue growth of 13% despite a stagnant U.S. streaming market.
- Operating margins at 31.7%, up from 27.2% in 2023.
- Analyst upgrades: 23 of 34 analysts rate Netflix “buy” or higher, with average price targets 20% above current levels.

In a world where tariffs are reshaping industries, Netflix’s model—unburdened by physical goods and insulated by recurring revenue—looks increasingly future-proof. For investors seeking stability in volatility, this is a stock that checks all the boxes.