As is the case with most Netflix earnings reports, the question for the company on Tuesday isn’t whether the number of subscribers will rise – it’s about just how high the number can go.
Most Wall Street analysts expect a marked surge in the fourth quarter, which ended Dec. 31, driven by the Jake Paul-Mike Tyson fight, two NFL games and series premieres like Squid Game‘s second season.
The report by Netflix, coming on the first full day of President Donald Trump’s second term, will kick off a five-week period of fresh media and tech financial results. The numbers and executive comments, a burst after the annual holiday lull, will offer the first signals about the trajectory of 2025.
Disney, Warner Bros. Discovery and Fox Corp. are expected to weigh in on their failed joint streaming venture, Venu Sports, and Comcast will brief Wall Street on progress with NBCUniversal cable network spinoff it announced last November, and Paramount Global will offer updates on the company’s pending merger with Skydance Media. Big Tech leaders will also make their voices heard after flocking to Washington for Trump’s inauguration.
Netflix is expected to add 8.2 million subscribers in the quarter, reaching 290.9 million, according to the consensus forecast by Wall Street analysts. Given the company’s momentum surging at the end of December, estimates are undergoing upward revision. A survey of 45 buy-side analysts conducted by Guggenheim Securities found that 70% of them are calling for at least 11.1 million net adds in the quarter, and 29% are now north of 13.1 million. This is the last quarter when the streaming leader plans to report subscriber numbers, shifting its emphasis to revenue and operating margin, along with audience metrics like engagement.
Tim Nollen of Macquarie believes the timing of the subscriber disclosure end is not accidental. “It is possible subscription growth will slow from here as paid sharing enforcement has largely cycled through,” he wrote in a note to clients, “but a slowing rate of sub growth does not necessarily mean slower growth for the company overall.”
Nollen sees the company adding more than 10 million subscribers in the quarter, with “a decent chance” the tally ends up even higher, one reason he upped his 12-month price target on Netflix shares to $965, from $795.
Alicia Reese of Wedbush Securities sees the company’s 2-year-old advertising business becoming a primary driver of revenue by 2026. In a recent research note, she maintained her “outperform” rating on Netflix stock at a 12-month target of $950. “Netflix has established a virtually insurmountable lead in the streaming wars,” she wrote. “Netflix can retain its moat while competitors try to replicate its business model. … With global content creation, balancing costs, and increasing profitability, Netflix has reached the right formula.”
Among the questions Netflix will like face during its self-mediated earnings call (in which its head of investor relations selects and groups analyst queries as opposed to an open conference-call format) concern price hikes, advertising growth and the strategy for live sports. The streaming giant announced just before Christmas that it acquired rights to multiple editions of the FIFA Women’s World Cup, adding to the multi-year NFL relationship launched in 2024. Sports-adjacent WWE Raw also began weekly live airings earlier this month under a multi-year rights deal, adding a potent draw to the ad tier, which is where Netflix is focusing its energy.
Disney is executing a similar streaming strategy. With its portfolio finally profitable five years after the launch of flagship Disney+, the company is pushing more customers toward the cheaper, ad-supported option. It also mimicked Netflix’s effort to force anyone sharing passwords to pay for the privilege.
Like its media peers, Disney faces a number of other challenges. The L.A. wildfires, which got the year off to a catastrophic start, especially for many entertainment industry workers, will factor into the company’s earnings report even though they broke out after the quarter’s end. In a recent note to clients reaffirming her “buy” rating on Disney but raising some concerns, BofA Securities analyst Jessica Reif Ehrlich wrote that it “does not appear the recent LA fires have had a material impact on Disneyland attendance.” Even so, she sees “potential risk” to forecasts for incremental costs due to the need for temporary employee housing and business disruption.
The quarter ending 2024, which is officially the first quarter of Disney’s fiscal year, which began last fall, “will be the trough quarter of this fiscal year” for the company’s Experiences division, Ehrlich predicts. The impact of two recent hurricanes, along with cruise ship pre-opening costs, will weigh on results.
And then there is Venu, which was scrapped before ever launching. Announced with fanfare in February 2024 by JV partners Disney, Fox and WBD, it was sued on antitrust grounds by pay-TV provider Fubo. As part of a settlement reached this month, Disney said it would acquire 70% of Fubo.
All three partners are likely to be asked to quantify their investment in Venu. During the trial, it was revealed that the tab had exceeded $50 million as the streaming offering was designed and staffed by more than 100 employees. Shutdown costs are likely to add millions more at an inopportune time given the austerity drive and cutbacks rippling through the traditional media sector.
With a mixed bag including better movie studio results but disappointing NBA ratings and expenses for things like password sharing and other streaming initiatives, Ehrlich sees “several moving parts” and “unknowns” in play for Disney.
Big Tech executives at Amazon, Apple, Alphabet and Meta Platforms, meanwhile, usually keep their strategic cards close to the vest as they report earnings. This time, they will be speaking to investors shortly after gathering together in Washington, D.C. In throwing their support behind President-elect Trump along with major tech figures like Elon Musk and Marc Andreessen, the companies are hoping to be rewarded for their loyalty.
Trump’s first term was marked by combative and acrimonious relations with the companies, many of which ultimately banned him from their platforms. President Biden’s administration has seen a number of regulatory actions aiming to rein in the companies’ power.
Despite a parting warning from Biden about the “oligarchs” attempting to influence American democracy, a shared priority has taken shape among tech companies and government officials: making money through innovation. That’s a political message Wall Street can always endorse.
