Netflix stock (NASDAQ: NFLX) fell about 3% in early morning trading on Wednesday after the streaming giant issued cautious guidance for the current quarter, thereby overshadowing a modest earnings beat and raising concerns about slowing growth.
Earnings Beat Fails to Reassure Investors
Netflix reported slightly better-than-expected results for the fourth quarter, demonstrating resilience despite a challenging market backdrop.
For the quarter through December 31, Netflix posted diluted earnings per share of $0.56, narrowly exceeding the consensus forecast of $0.55. Revenue came in at $12.05 billion, topping analysts’ expectations of $11.97 billion.
The streaming giant attributed the stronger-than-expected performance to consistent viewer engagement, primarily driven by major content launches including the concluding season of Stranger Things and the premiere of Frankenstein.
Subscriber and Advertising Growth Remain Bright Spots
In addition to its financial performance, Netflix continued to expand its global footprint, ending the year with 325 million paid subscribers worldwide.
Moreover, advertising remained an important factor underpinning growth. The company reported that ad sales more than doubled year-over-year, thereby reflecting robust demand in its advertising business. Consequently, total advertising revenue exceeded $1.5 billion between 2024 and 2025.
The results highlight Netflix’s ongoing strategy to diversify revenue beyond subscriptions.
Soft Q1 Outlook Weighs on Shares
Nevertheless, despite solid recent results, Netflix’s guidance for the first quarter fell short of market expectations. The company forecast earnings of $0.76 per share, compared with Wall Street’s estimate of $0.81.
Similarly, revenue is projected at $12.16 billion, slightly below the $12.19 billion analysts had anticipated. Consequently, the weaker outlook prompted investors to reassess near-term growth prospects, intensifying pressure on the stock.
Looking ahead to 2026, Netflix projected full-year revenue in the range of $50.7 billion to $51.7 billion, slightly below Wall Street’s consensus estimate of roughly $51 billion.
Specifically, the company projects annual revenue growth of 12% to 14%, or 11% to 13% on a currency-adjusted basis. This would mark a deceleration from the 16% expansion recorded in 2025.
Additionally, Netflix addressed evolving viewing patterns, noting a decline in hours spent watching licensed, non-branded content. Management attributed the shift to a surge in content licensing over 2023 and 2024, following the Writers Guild of America’s 148-day strike, which disrupted production schedules and prompted changes in programming strategies.
Warner Bros. Bid Adds Strategic Uncertainty
The company unveiled its latest earnings shortly after boosting its bid for Warner Bros. and the HBO Max platform to $72 billion. The move underscores Netflix’s ambition to strengthen its competitive position. Simultaneously, it brings added uncertainty, given rival interest from Paramount Skydance.
In a note to clients, Jefferies analysts characterized the company’s latest earnings as “mixed”. They added that greater transparency on the Warner Bros. deal could provide an upside boost for the shares.
At the time of reporting, Netflix shares (NASDAQ: NFLX) were trading at $84.89, down 2.68% for the session. The stock has retreated 10.23% over the past month, and 1.66% on a year-over-year basis. This performance places its market capitalization at approximately $386.4 billion.
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