Netflix earnings beat the Street, but the stock is down. What disappointed Wall Street in the report
Analysts across Wall Street cut their Netflix price targets after the streamer delivered a narrow fourth-quarter earnings and revenue beat but highlighted other areas of concern, such as slowing momentum in average viewing hours per member. Netflix earned 56 cents per share on $12.05 billion in revenue. That slightly exceeded the 55 cents per share and revenue of $11.97 billion that analysts polled by LSEG had penciled in. Along with slowing viewing hours, analysts were also disappointed with the company’s earnings and revenue guidance for the current quarter and its margin guidance for the full year 2026. “Q1 and full year guide light, mainly on costs,” wrote Hamilton Faber, an analyst at Rothschild & Co. Redburn The concern about costs comes as Netflix prepares to acquire Warner Bros. Discovery ‘s studio and streaming assets. A Tuesday SEC filing revealed that Netflix adjusted its offer to an all-cash bid after initially reaching a deal in December. Shares of Netflix plummeted 7% in Wednesday’s premarket trading hours. Analysts at different shops highlighted lower viewing hours per member as a major concern for the streamer. This figure grew by 2% year over year, marking a 7% decline from 2025, said Guggenheim Partners. “While engagement appeared to slightly accelerate to +2% from +1% we remain concerned that short form entertainment (such as TikTok, Insta, X, YouTube shorts and Snap) is doing to streaming what streaming has done to traditional TV as (especially younger) consumers spend an ever increasing time on these platforms amidst plummeting attention spans (which is fundamentally negative for long form content),” wrote Pivotal Research Group analyst Jeffrey Wlodarczak. Analysts added that this might be exacerbated by overhangs on the potential deal between Netflix and Warner Bros Discovery. As headwinds Woldarczak cited deal approval risk, a lengthy time frame to close and an ongoing bidding war that may not yet be over. “We believe this very expensive deal highlights NFLX management’s concern that short form entertainment is an increasing issue for NFLX,” he added. Bottom line, most analysts maintained their long-term bullish stance on Netflix but cut their price targets. Here’s what analysts at some of Wall Street’s biggest shops had to say on the report. Pivotal Research Group: hold rating, $95 Wlodarczak’s price target, down from $105, implies about 9% downside from Netflix’s Tuesday close. “NFLX reported a solid 4Q financial result that was slightly ahead of expectation on revenue and operating income, 2026 financial guidance was right in-line with our expectations, however NFLX disclosed that it had reached a subscriber level (325M) in 4Q that was ~10M lower than our forecast … We reiterate our HOLD rating on NFLX and believe current price levels are reasonable, but there is not enough upside to warrant a Buy rating.” KeyBanc Capital Markets: overweight, $108 KeyBanc’s forecast, down from $110, corresponds to upside of around 24%. “Netflix’s 4Q results and 2026E revenue guidance were better than expected. However, we believe nuances around engagement, incremental investment, and uncertainty on Warner are likely to weigh on the stock NT. We walked away incrementally confident on the standalone Netflix growth algorithm, and believe the P/E multiple is approaching a trough.” Rothschild & Co. Redburn: buy, $120 Faber’s target, cut from $145, calls for 38% upside going forward. “The company surpassed 325m subscribers during the quarter, in line with the year-end 327.3m consensus forecast, while advertising rose 2.5x to $1.5bn in 2025 — the advertising increase was better than the prior guide of more than doubling but the absolute figure, the first time this has been reported, was materially below the $2.5bn consensus estimate, implying a lower potential contribution to growth in the medium term.” Canaccord Genuity Capital Markets: buy, $125 Analyst Maria Ripps’ forecast, down from $152.50, is 43% above Netflix’s Tuesday closing price. “NFLX stock has been under pressure since late October, and shares are down modestly after hours, ostensibly reflecting more moderate 2H25 engagement metrics along with higher projected content and other spend for 2026. That said, Netflix’s leadership in original content, as well as investments in licensed content and emerging genres, should continue to support durable engagement and healthy revenue growth. Coupled with robust advertising momentum and disciplined underlying expense management (10% growth in 2025 ex. Brazil tax impact and 11% forecast in 2026 ex. M & A), we believe the recent pullback creates an attractive entry point.” Guggenheim Partners: buy, $130 Analyst Michael Morris’ price target, down from $145, was approximately 49% higher than Netflix’s closing price on Tuesday. “Netflix delivered top-and-bottom line beats slightly ahead of Street 4Q forecasts, though engagement trend and 2026 profit guidance temper enthusiasm … We expect the path to conclusion on the WBD bid will remain a primary sentiment driver and likely [keep] share appreciation [limited] over the next three months.” Jefferies: buy, $134 Jefferies’ target equates to 54% upside. “We view the Q4 print as mixed with the FY26 op. margin guide of 32% (ex M & A) vs. expects of 33% and 2% y/y 2H viewing hour growth the primary negatives. More positively, the FY rev guide of 12-14% growth was slightly ahead, and mgmt reaffirmed its leaked 2030 targets. All considered, NFLX is tracking well against its LT growth algo, and we see a floor price of $75 (20x FY27 EPS). Increased deal certainty would be a key positive catalyst.”
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