Shares of streaming giant Netflix Inc. (NFLX) are deep in the red in premarket trading on Wednesday after the company reported fourth-quarter results that topped estimates and provided guidance that was in line with expectations.
NFLX stock is down 7.1% at $81.09 before markets opened.
Word on the Street
Wedbush (rating “outperform”; PT $115) blames the “underwhelming” report for the current share weakness, as investors have become accustomed to “phenomenal results.” However, the research firm thinks Netflix is positioning for substantial growth in global advertising, and that should not be overlooked.
“Ad revenue should at least double to $3 billion in 2026, with significant opportunities remaining in 2027 and beyond, particularly if Netflix can close the WB deal next year,” Wedbush said in its note.
“Netflix’s results should improve throughout the year, and shares should see a notable lift, particularly in the back half of the year when advertising revenue and price increases outpace increased content spend.”
Jefferies (rating “buy”; PT $134) sees the Q4 print as “mixed” but expects the company to remain the dominant player in streaming and expects revenue and FCF to grow at 10%+ and 15%+ CAGRs over the next 5 years, respectively.
The research firm also noted that management reaffirmed confidence in its 2030 internal targets ($80B revenue, $30B OI, and 410M subs), which it views as a positive, along with the FY rev guide of 12-14% growth, which is slightly ahead of its expectations.
Morgan Stanley (rating “overweight”; PT cut by $10 to $110) continued to stay bullish on the company for its ability to drive adj. EPS growth over 20% annually through 2028E as it continues to scale the world’s largest streaming business.
MS analysts think results were strong on an annual basis, and the guidance implies another year of double-digit percentage top-line growth and margin expansion.
The research firm noted that Netflix surpassed 325M members in 2025, which translates to net additions of more than 25M, more than any other major streaming service despite boasting the largest existing member base.
Needham (rating “buy”; PT cut by $30 to $120) thinks Q4 results were “strong.” The research firm views the strong content slate the platform has for 2026, its focus on international growth driven by local content, and its diversification into complementary businesses such as voting, podcasts, video games, etc., as reasons for maintaining its bullish rating.
Canaccord Genuity (rating “buy”; PT cut by $27.50 to $125) thinks Netflix reported “solid” Q4 results, with both revenue and OI ahead of expectations and guidance, and views the current pullback in shares as “an attractive entry point.”
However, the research firm believes Q1 revenue guidance was broadly in line with expectations, while the OI outlook was modestly below consensus amid expectations for elevated content amortization in 1H26.
“NFLX stock has been under pressure since late October, and shares are down …, ostensibly reflecting more moderate 2H25 engagement metrics along with higher projected content and other spend for 2026,” the research firm said.
“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.”
Seeking Alpha Analysts
Cyn Research: Netflix is rated “Buy” due to robust growth prospects, margin expansion potential, and an attractive valuation after a 37% pullback. NFLX delivered strong Q4 results, with 16% revenue growth, a 29.5% operating margin, and rapid ad revenue acceleration, supported by AI-driven enhancements. NFLX valuation appears compelling at a 27x forward P/E and ~35% discount to historical EV/EBIT mean, though execution risk and elevated multiples remain.
Long Player: Netflix shares have declined despite earnings and cash flow growth. The proposed Warner Bros. Discovery acquisition addresses strategic gaps. Management plans to retain WBD’s leadership. This strategic move enhances merger success prospects. NFLX’s current valuation still implies unsustainable 30%+ annual growth. That signals further downside risk as market expectations normalize to the guided long-term growth rate. Post-combination cash flow appears reasonable for the amount of debt that will be on the balance sheet after the merger completes.
“The earnings announcement shows that the business of Netflix itself continues to grow. But that growth will likely be in the teens for the long term. That growth rate is far slower than the price-earnings ratio would seem to indicate. Therefore, it is quite possible that the declining stock price indicates a transition to reality.”
Gary Alexander: Netflix is upgraded to a “Buy” after a sharp ~30% decline from peaks eliminates prior valuation concerns, despite Q1 guidance modestly missing consensus. NFLX’s $72B all-cash offer for Warner Bros. would push leverage to ~5x EBITDA, but bridge funding is secured and synergies are expected. The stock sits at below a <1x PEG ratio, undervaluing the company for its growth potential.
Julian Lin: Netflix delivered strong Q4 results, with revenue up 17.6% YoY and operating margins expanding over 200 bps to 24.5%. The pending all-cash $72 billion acquisition of WBD’s streaming and studio assets raises concerns about future leverage and net margin pressure. Despite trading at under 8x forward sales, NFLX’s 27x forward earnings and projected PEG ratio near 2x remain unattractive given upcoming balance sheet risks.