Netflix’s Q1 Rally Outpaces 2025 Growth – Will Earnings This Week Justify The Run-Up?

• The late-February rally signaled investor approval, as exiting the deal eased concerns over competition and regulatory hurdles.
• Netflix’s global user base has surpassed 300 million, with increasing focus on generating revenue from its ad-supported plan.
• Analysts expect a first-quarter revenue of $12.17 billion and an earnings per share of $0.77.

Netflix Inc. (NFLX) is drawing attention as it approaches its first-quarter earnings report on Thursday, with investors closely watching whether the streaming giant’s increased focus on independence and profitability can sustain its recent stock rebound.

The company’s stock performance in Q1 reflected a turnaround, with a over 9% gain, nearly double the 5% growth for the whole year in 2025. 

Strategic Reset Pays Off

The turning point came in late February, when Netflix abandoned its high-profile pursuit of Warner Bros. Discovery (WBD), opting instead to pay a $2.8 billion breakup fee and avoid additional financial risk. 

The stock’s surge in late February reflected investor optimism, with the move to back out from the deal seen as favorable amid aggressive rival bids and ongoing regulatory concerns.

“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval. However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid,” said Netflix. 

Netflix stock inched 0.4%higher in Monday’s premarket. On Stocktwits, retail sentiment around the stock changed to ‘bullish’ from ‘extremely bullish’ territory the previous day amid ‘high’ message volume levels. 

Three Key Growth Drivers

Netflix now has more than 300 million global users, with a growing emphasis on monetizing its ad-supported tier.

Ahead of the earnings, investors are focusing on three major levers. First, Netflix’s ad-supported tier is emerging as a critical revenue stream, with guidance to double annual ad sales to $3 billion in 2026. Second, recent price increases across subscription plans will test customer retention. Third, the company’s push into live sports and gaming, aiming to create content that attracts both viewers and advertisers.

On April 9, Morgan Stanley initiated coverage with an Overweight rating and raised their price target to $115 from $110, according to TheFly. The firm said Netflix is positioned to deliver a consistent double-digit revenue increase, with earnings and free cash flow growing at an annualized rate of 20%.

According to Fiscal AI data, analysts see Q1 revenue of $12.17 billion and an earnings per share (EPS) of $0.77.

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