Netflix, the world’s biggest streaming company, is feeling the heat this week. As it gets ready to announce its third-quarter (Q3) earnings on Tuesday, Wall Street is nervous, and investors are watching closely. The company’s stock has been sliding, and many are wondering: Is this just a small dip or a warning of bigger trouble ahead?
Over the last five trading days, Netflix’s stock price has been on a losing streak. On Wednesday, it fell 1.6%, closing at $1,183.59. Even more concerning, the stock dropped below its 50-day moving average, a level that many traders see as a sign of strength or weakness in a company’s stock. Once that line is broken, it often makes investors nervous.
Strong Numbers Expected, But Will They Be Enough?
Despite the stock’s recent slump, analysts are expecting solid results for Netflix’s third quarter. According to research firm FactSet, experts predict the company will report earnings of $6.96 per share and revenue of $11.51 billion. That would mean Netflix’s profits jumped 29% and its sales grew 17% compared to last year, not bad for a company that already dominates the global streaming market.
Looking ahead to the current (fourth) quarter, analysts think Netflix will earn $5.43 per share on $11.89 billion in sales. Those numbers would show steady growth of around 27% in earnings and 16% in revenue. Still, some investors worry that growth may start slowing down as the streaming market becomes more crowded.
So, if the numbers are strong, why is Netflix’s stock falling? That’s the big question, and it has a lot to do with what’s coming next.
The Ad-Supported Plan Could Change Everything
One major area of focus in the upcoming earnings report will be Netflix’s advertising-supported plan, a cheaper subscription tier that includes ads. This version was launched to attract budget-conscious viewers while giving Netflix a new way to make money.
Bernstein analyst Laurent Yoon remains confident in Netflix’s direction. He recently restated his outperform rating on the stock, with a price target of $1,390. Yoon believes the company’s new ad strategy and popular content lineup are keeping audiences hooked.
Last quarter, Netflix had several major hits, including the second season of “Wednesday,” the third season of “Squid Game,” and the animated movie “KPop Demon Hunters.” These shows helped drive engagement and kept viewers coming back for more.
But here’s where it gets interesting: will Netflix’s new ad tier really take off, or will it annoy long-time subscribers who signed up to avoid commercials in the first place? The upcoming report could give the first real clues.
Analysts Split on What Happens Next
Not everyone agrees on where Netflix is headed. Some analysts think the company’s best days are still ahead, while others believe the stock is already priced for perfection.
UBS analyst John Hodulik is among the optimists. He’s keeping his buy rating and a high price target of $1,495, saying Netflix should be able to grow sales by double digits for years to come. He points to the company’s rising membership numbers, price increases, and growing advertising business as key strengths.
However, Monness Crespi Hardt analyst Brian White isn’t as confident. He maintained a neutral rating on Netflix, warning that while the company’s platform is powerful, the competition is fierce and the stock’s valuation is already very high.
“Netflix has built an amazing entertainment platform and is doing well with its digital ad business,” White said. “But the competition keeps changing, the economy is uncertain, and the stock isn’t cheap.”
Could he be right? Or is Netflix about to prove the doubters wrong once again?
What’s Next for Netflix?
Netflix has always been known for breaking the rules of entertainment, from mailing DVDs in the early 2000s to becoming a streaming powerhouse that changed how the world watches TV. Now, it faces its toughest challenge yet: keeping up its massive growth while fending off fierce rivals like Disney+, Amazon Prime Video, and Warner Bros. Discovery’s Max.
Investors are asking whether Netflix can keep reinventing itself. Can its ad-supported tier succeed where others failed? Can its blockbuster shows keep audiences engaged as more competitors fight for attention?
The upcoming earnings report could answer some of these questions, or raise even more. For now, all eyes are on Tuesday night. Will Netflix surprise everyone with another strong performance? Or will the streaming giant finally hit a wall?
Either way, one thing’s for sure: the next few days could be a turning point for the company that changed entertainment forever.
