Stage Set
Netflix’s stock has steadily declined since hitting a record high in mid-2025, reversing several months of gains. The downtrend continued this week, and the shares closed the last session below their 52-week average of $109.84. NFLX has lost nearly 30% over the past six months. Meanwhile, experts see a strong upside for the stock, with their consensus target price indicating gains of around 45%, currently.
Good Show
In the third quarter, the company’s revenue climbed 17.2% to $11.51 billion from $9.82 billion in the same quarter of fiscal 2024, broadly in line with estimates. Net income rose to $2.55 billion or $5.87 per share in Q3 from $2.36 billion or $5.40 per share in the prior-year quarter. Earnings fell short of Wall Street’s expectations, marking the first miss in seven quarters.
From Netflix’s Q3 2025 Earnings Call:
“I’m trying to figure out how to incorporate the latest technology, including AI and Gen AI. We’re trying to figure out how we build better product experiences that can serve consumers better around the world. How about customer acquisition and retention? How do we optimize global payments? How do we optimize global partnerships? There is so much and we want to get better at all of those things. Our competitors are seeking to get better, all those things, of course, as well. But you have to do that by the hard work of developing those capabilities in the trenches day to day. You don’t get there simply by buying another company that is also still developing those same capabilities.”
Next Act
In a recent statement, Netflix said that for the fourth quarter, it expects a net income to be $2.36 billion or $5.45 per share and operating margin to be 23.9%. The company has made significant progress in its advertising capabilities lately. It targets to more than double advertising revenues in FY25, after recording the highest ever ad sales in the most recent quarter. Recently, the company agreed to acquire Warner Bros., including its film and television studios and HBO for approximately $82.7 billion.
On Thursday, NFLX opened lower and mostly traded near the $90 mark during the session. The stock has declined by nearly one-third after hitting an all-time high in June 2025.