Netflix Earnings Beat Expectations but Stock Declines: What Disappointed Investors

Netflix recently reported its fourth-quarter earnings, surpassing analysts’ expectations with earnings of 56 cents per share on $12.05 billion in revenue. While this beat was narrow, it wasn’t enough to keep Wall Street from cutting their price targets for the company. One of the main concerns highlighted by analysts was the slowing momentum in average viewing hours per member. This figure only grew by 2% year over year, marking a 7% decline from the previous year.

Analysts also expressed disappointment in Netflix’s earnings and revenue guidance for the current quarter, along with its margin guidance for the full year of 2026. The concern about costs comes as Netflix moves forward with its acquisition of Warner Bros. Discovery’s studio and streaming assets. This deal has faced challenges, with concerns around deal approval risk, a lengthy closing timeframe, and an ongoing bidding war that may not be settled yet.

Despite these concerns, analysts have maintained their long-term positive outlook on Netflix, but have revised their price targets downward. Some of the biggest Wall Street shops have adjusted their forecasts, with price targets ranging from $95 to $134 per share. While the stock may be down, analysts see potential for growth based on Netflix’s leadership in original content, advertising momentum, and disciplined expense management.

In conclusion, while the recent earnings report may have disappointed some on Wall Street, Netflix’s solid financial performance and strategic moves in the streaming landscape continue to support confidence in the company’s long-term growth prospects.