What I’m watching for in Netflix’s earnings report

Netflix (NASDAQ: NFLX | NFLX Price Prediction) reports Q4 2025 earnings Tuesday, January 20, after the bell. After a brutal six-month selloff that’s knocked shares down 28% to around $89, this report could reset the narrative or confirm investor fears about slowing growth.

A Rocky Setup After Last Quarter’s Miss

Q3 2025 delivered a jarring reality check. Revenue hit $11.51 billion, matching consensus exactly, but EPS came in at $5.87 versus the $6.97 estimate. That 15.8% miss broke a four-quarter beat streak and stemmed largely from a $619 million Brazilian tax dispute that crushed operating margin by more than 5 percentage points. Management framed it as a one-time hit, but the damage to sentiment was real. Shares have drifted lower ever since, falling from around $1,100 in early November to current levels near $90.

Since that October report, the story has shifted. The NFL Christmas games pulled massive viewership. Stranger Things wrapped its final season. The company pursued an $83 billion bid for Warner Bros. Discovery, signaling M&A ambitions that could reshape its content library and competitive position.

Three Things That Will Move the Stock

I’ll be watching subscriber additions first. International markets need to carry the load as US growth decelerates. Management guided to 17% revenue growth for Q4, but that number means nothing if net adds disappoint or if churn ticks higher. The NFL games and Stranger Things finale should have driven sign-ups, but you need to see whether those viewers stick around or cancel after binging.

Second is advertising revenue momentum. This has been the bull thesis for two years, and it needs to show real inflection now. If ad revenue growth accelerates meaningfully and management signals confidence in scaling that business, it validates the idea that Netflix can layer a second revenue stream onto subscriptions without cannibalizing the core. If it’s still early innings with vague optimism, the market will lose patience.

Third is 2026 guidance and how management frames the Warner Bros. deal. Wall Street needs clarity on whether that acquisition is happening, what it costs, and how it affects the earnings outlook. HSBC thinks the deal could add 2% to 4% to earnings if it closes, but Paramount is fighting hard with a higher all-cash bid. If management ducks the question or offers murky guidance because of M&A uncertainty, that’s a problem. You should also listen for tone on content spending. Operating margin came in at 28% last quarter after the tax hit. Management previously guided to 29% for the full year. If they walk that back or signal margin pressure in 2026, it undercuts the profitability story.

Prediction markets show 59.5% odds of an earnings beat, but that probability has fallen 15.5% over the past week. The crowd is getting nervous.

Execution Needs to Match the Hype

This earnings call matters because Netflix is at an inflection point. The stock trades well below Wall Street’s average price target of $128, suggesting analysts still believe in the long-term story. But belief doesn’t pay the bills. Management needs to show that subscriber growth holds, that advertising is scaling, and that the business can handle both organic execution and a transformative acquisition at the same time. If they deliver clean numbers and confident guidance, I think you’ll see sentiment shift fast. If they stumble or hedge, this selloff has further to run.