Netflix Inc. NASDAQ:NFLX, a global video-streaming company, is approaching a critical second-quarter earnings report as investors look for evidence that its business outlook can justify a recovery in the stock. Netflix shares have fallen about 45% since reaching a record high on June 30, 2025, wiping out approximately $259 billion in market value and placing the company among the 20 worst performers in the S&P 500 (SPY) over that period. The stock has also declined 31% since mid-April, when Netflix issued a weak forecast and announced that co-founder and Chairman Reed Hastings would step down. The decline has intensified concerns because Netflix shares have fallen after each of the company's previous four earnings reports. Shares rose 0.3% in Thursday afternoon trading ahead of the latest results.
Investor attention is expected to focus heavily on audience engagement and management's strategy for keeping viewers subscribed and watching its programs. Research firm M Science reported that June data suggested Netflix could record its weakest quarterly global net additions since 2022, while customer cancellations in the U.S. appeared higher than during the company's 2025 price increase. Meta Platforms Inc. NASDAQ:META, the owner of Instagram, has also said it is exploring new formats for Instagram for TV, potentially adding further competition in streaming. At the same time, movie-theater companies Cinemark Holdings Inc., Imax Corp. and AMC Entertainment Holdings Inc. (AMC) have outperformed Netflix this year as films including Backrooms and Obsessions attracted audiences to cinemas. Netflix has discussed introducing live channels and bundling other subscription streaming services, while its unsuccessful pursuit of Warner Bros. Discovery Inc. and reported interest in Roku and Lionsgate have added to investor questions about whether acquisitions could play a larger role in its strategy.
Wall Street expects Netflix to report second-quarter revenue of roughly $13 billion, representing a 14% increase, while earnings per share are projected to rise 10% to 79 cents. Analysts remain broadly positive, with 51 of the 64 analysts tracked by Bloomberg rating the stock a buy and the average price target of $112.51 suggesting potential upside of 52% over the next 12 months. Netflix currently trades at about 20 times projected earnings for the coming year, compared with its 10-year average of 51, and is valued at a slight discount to the S&P 500 for the first time since 2022. Riverpark Capital portfolio manager Conrad Van Tienhoven expects the results to indicate that advertising is continuing to expand, customers are absorbing price increases and the underlying business remains healthy. However, investors may view management's outlook and its plans to improve engagement as more important than the quarterly figures, particularly after the stock's steep decline and the departure of Hastings.