Wall Street and SA analysts weigh in on Netflix’s Q2 report

Netflix’s (NASDAQ:NFLX) second-quarter earnings beat expectations on top and bottom lines, and the streaming giant raised full-year revenue expectations. Shares of the company were down nearly 5% by midday on Friday.

Word on the Street

Morgan Stanley (reiterate “overweight”; PT hiked to $1,500 from $1,450): The research firm said results were ahead of expectations. Netflix’s first advertising upfront with its own ad tech stack appears a success, sustaining premium CTV ad rates and supporting a doubling of ad revs in ’25.

GenAI tools are contributing to content innovation, notably in VFX and de-aging, while Netflix is piloting a natural language UI tool. Engagement is stable YoY on a per-owner HH basis, MS analysts said on Friday.

While limited in specifics, overall momentum in the still nascent advertising business appears strong, they said.

Wells Fargo (reiterate “overweight”; PT hiked to $1,560 from $1,500) Q2 was a modest beat/raise. Investors are now focused on share gains; the next ~12 months will be rich with announcements in short-form + sports/live, the research firm said.

While some expense timing likely benefited Q2, WF thinks NFLX has strong operating leverage.

The FY’25 revenue guide was raised from $43.5-$44.5 billion to $44.8-$45.2 billion—mostly on a weaker USD, but also on stronger sub growth + ARM (incl. ads). The ’25 margin guide is +50 bps F/X neutral to 29.5%, or ~30% as reported (street 29.7%), Wells Fargo said.

Evercore ISI (reiterate “outperform”; PT hiked to $1,375 from $1,350) “Upside was expected, and upside was delivered, thanks to FX, strong subscriber growth, and ad revenue ramping. Fundamentals were impressive, with ex-FX revenue growth accelerating to 17% Y/Y and operating margin reaching a record high of 34%, thanks largely to content cost leverage. Netflix is winning the streaming market thanks to excellent execution, a stellar content slate, and scale advantages,” the research firm said.

Bank of America (reiterate “buy”; PT unchanged at $1,490) “Netflix remains among the best-positioned companies in media and entertainment with sustainable growth drivers that should prove to be predictable and defensive amid a wide range of macroeconomic scenarios… Notably, growth across regions was broad-based, with each region posting double-digit FX-neutral increases,” BofA said.

BofA said Netflix shares will be fueled by continued positive subscriber and earnings momentum in addition to evolving advertising and live opportunities. Supported by its world-class brand, leading global subscriber scale, position as an innovator, and increased visibility in growth drivers, the research firm believes that Netflix will continue to outperform.

Seeking Alpha analysis

Max Greve (rating “hold”): “Netflix, Inc.’s latest quarter impressed me, with strong revenue growth in UCAN and growth that went far beyond just currency tailwinds. Subscriber growth and retention remain robust, even after price hikes, and with paid sharing and advertising still evolving,” Greve said on Friday.

“I’m cautious about Netflix’s push into advertising and sports, fearing these could undermine its core value proposition. Comcast’s announcements on the same day illustrate just how quickly a sports-ads strategy can spiral when costs are not managed appropriately. Despite a strong quarter, I maintain a Hold rating on NFLX stock due to concerns about the sustainability of the new strategic direction.”

Livy Investment Research (rating “hold”): “Netflix has delivered a robust Q2 beat and raise, yet the stock took a downturn during late trading. A deeper dive into management’s disclosures shows Netflix’s better-than-expected outlook is primarily driven by improved FX conditions on the weaker dollar, rather than incremental outperformance from operations, the SA analyst said on Friday.

“This leaves limited mitigation against a tougher 2H24 compare. Despite the larger content slate in 2H25, it’ll likely be difficult to match robust engagement acquired from prior-year events. Taken together, the set-up leaves limited durability against looming tariff-driven macro risks as well, to which Netflix’s consumer-focused business model remains vulnerable to.”

EquityDuo Insights (rating “sell”) “NFLX remains the global leader in streaming with over 300 million subscribers and diverse content offerings. Strategic moves like cracking down on account sharing and introducing ad-supported plans have boosted subscriber growth and profitability,” the SA analyst said on Friday.

“Despite robust financials, Netflix’s valuation appears stretched based on both DCF and technical analysis, suggesting limited upside potential. Given industry uncertainty, we believe Netflix stock is currently less compelling for new bullish investors.”