NEW YORK, NEW YORK – NOVEMBER 30: Netflix founder and Co-CEO Reed Hastings speaks during the New … More
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Since the beginning of the year, it has become more difficult for companies to do what’s needed to make their stock prices go up — namely beat and raise, which is my shorthand for exceeding Wall Street revenue and profit forecasts and raising their guidance. Netflix stock may be an exception.
As first quarter earnings roll in, I expect many companies will beat and lower. They will suffer a drop in their stock price even if they beat revenue expectations as customers scrambled to buy their products before tariffs kicked in.
Are there any companies immune from tariffs and the general gloom resulting from the rising risk of stagflation? If so, how?
Many businesses will announce lower-than-expected guidance due to the uncertainty surrounding the tariffs and other policies of President Donald Trump — which 76% of CEOs expect to afflict their companies, according to a poll by Chief Executive Magazine cited in the New York Times’ DealBook newsletter.
With Netflix’s first quarter 2025 beat and raise announced April 17, according to the Wall Street Journal, investors still have at least one great company dodging the consequences and declining consumer sentiment.
In fact, Netflix — whose stock is up 14% in 2025 as of this writing, while the S&P 500 had fallen 10% — may benefit from a rise in demand as consumers seek an escape from the current period’s general uncertainty — akin to what the market experienced during the COVID-19 pandemic.
Two analysts see Netflix stretching as it tries to achieve ambitious long-term growth goals — but they also see it as a financial oasis in what could be a difficult market environment.
Netflix’s Boffo Performance And Prospects
Netflix posted record profits and expects stronger revenue growth in the current quarter.
The streamer exceeded forecasts for revenue and operating margin and benefited from hits such as “Adolescence,” Shonda Rhimes’ “The Residence” and live broadcasts of WWE’s “Raw” wrestling show. Moreover, despite Trump’s trade policies, advertising and subscriber engagement remain strong, company executives said according to the Journal.
Here are the key numbers:
First Quarter 2025 revenue: $10.54 billion – up 13% and $20 million more than London Stock Exchange Group expectations, according to CNBC.
Q1 2025 net income: $2.89 billion — a 24% increase from the previous year, CNBC noted.
Q1 2025 earnings per share: $6.61 — up 52% and 91 cents per share more than analysts polled by LSEG expected, according to CNBC.
2025 revenue forecast: $44 billion — the midpoint of a range between $43.5 billion and $44.5 billion — which is 13% higher than 2024 revenue and unchanged from Netflix’s previous forecast, CNBC wrote.
Five-year market cap, revenue, and other goals. By 2030, Netflix aims for a $1 trillion market capitalization, to double revenue to about $80 billion, to generate $9 billion in global ad sales — up from $2.15 billion estimated by eMarketer, and to increase subscriber count to 410 million, the Journal reported.
Netflix’s report was a welcome relief to investors as as “traditional media stocks have been slammed by a tumultuous market prompted by” Trump’s trade policy, CNBC reported.
The streamer’s steady outlook may have been a particularly important contributor to the bullish sentiment. “There’s been no material change to our overall business outlook,” according to Netflix’s Thursday statement.
Netflix’s co-CEO Greg Peters elaborated on the company’s prospects. “Based on what we are seeing by actually operating the business right now, there’s nothing really significant to note,” he said in earnings call details featured by CNBC.
“We also take some comfort that entertainment historically has been pretty resilient in tougher economic times,” Peters added. “Netflix, specifically, also, has been generally quite resilient. We haven’t seen any major impacts during those tougher times, albeit over a much shorter history.”
Co-CEO Ted Sarandos expected Netflix’s results to be resilient in the face of an economic slowdown. “Historically, in tougher economies, home entertainment value is really important to consumer households,” Sarandos told analysts on April 17, reported CNBC.
How Tariffs Are Affecting CEOs
Are we entering a period of slower growth and higher inflation? The answer could depend in part on what business executives do next. Will they cut back on research and development and capital investment? Will they lower their fixed costs and reduce corporate headcount? Will they raise prices to preserve their margins?
Their actions depend on the answers to questions somewhat out of their control such as questions, according to the Times, such as:
When will tariffs escalations stop?
Is there enough time for trade partners to strike deals?
Would the White House agree to carve-outs for specific industries or products?
The Chief Executive magazine poll conducted last week reveals a loss of CEO confidence not seen since spring 2020 as the COVID-19 pandemic was beginning. Here are the highlights of survey:
Tariffs hurt business. The survey found 76% of CEOs expect tariffs to “adversely affecting their business,” wrote the Times.
Fewer companies to raise capital expenditures. Since March, the percent of CEOs expecting to increase capital expenditures fell from 37% to 26%, the Times noted.
A recession this year is more likely. Of the CEOs surveyed, 62% “forecast a slowdown or recession in the next six months,” according to the Times.
Why Netflix May Be Investors’ Best Tariff Oasis
Netflix is the streaming industry leader, offers consumers a good value, has historically been resilient during economic downturns and depends lightly on more economically sensitive advertising.
Why may Netflix benefit during a period of tariff uncertainty? Here are four reasons:
Streaming market leadership. Netflix — with 302 million subscribers — enjoys a big streaming market lead over Prime Video (over 200 million) and Disney+ (125 million), reported PYMNTS.
Good consumer value. Netflix’s ad-supported $7.99 a month plan in its largest markets is an “incredible entertainment value that also gives us more resilience,” Peters said, according to PYMNTS. “It’s an accessible price point, and we really do expect the demand for entertainment to remain strong,” he added.
Strength during times of economic stress. Netflix sees its business as less dependent on economic growth. “Entertainment, historically, has been pretty resilient in tougher economic times,” Peters told investors, PYMNTS wrote. whether people are happy or sad, they still watch TV and movies, he added. So if there is a recession, Netflix should do fine.
Light dependence on ads. Since ad revenue is a small portion of Netflix’s total revenue, a slowdown in ad revenue will not affect Netflix much, concluded PYMNTS.
What Analysts Say About Netflix’s Prospects
Analysts are optimistic about Netflix’s prospects. Here are two examples:
While the streamer’s ambitious goals may be hard to achieve, Netflix’s organic growth strategy is wise. Netflix’s long-term goals could be “difficult to achieve,”according to a research note from Morningstar analyst Matthew Dolgin featured in PYMNTS. Yet Netflix’s organic growth and conservative bids for live sports programming “give Netflix the advantage of not having to manage a declining legacy business,” Dolgin wrote. Moreover, Netflix “isn’t burdened with expensive sports contracts or a subscriber base that is dependent on retaining sports rights.”
Netflix stock is likely to continue to outperform the market. Like the position cable TV held before cord-cutting, consumers will keep subscribing to Netflix in a downturn. “I think Netflix may have, kind of, that resilience in a downturn,” Edward Jones senior analyst Dave Heger told Fortune. The value of Netflix stock has increased nearly 30% a year since 2015 while the S&P 500 has gained 10% annually, noted Fortune. “You can’t really underestimate them if you look at how much of a disrupter they’ve been in the industry,” Heger said of Netflix management.
While these analysts offer comforting views for Netflix bulls, the future is far from certain. Leaders in other countries could retaliate against the U.S. by imposing tariffs on Netflix’s services sold to their citizens, noted Marca.
