A little over a year ago, Netflix (NFLX) stock was still riding high, trading just off record highs and lording over all other competitors in the streaming-video space it still dominates. Then came a big third-quarter earnings miss. Then a failed bid to buy Warner Bros. Discovery (WBD). Then another earnings miss this spring. Add it all up, and NFLX shares have fallen 40% in the last 12 months.
Is a turnaround imminent? That likely depends on next Tuesday’s (October 20) third-quarter earnings results – at least in the short term.
Another miss or microscopic bottom-line beat – the only two scenarios the company has mustered in each of the last four quarters – could send shares tumbling right back to their lows around 67 (they currently trade in the 72 range), or possibly lower. Another narrow beat, like it produced in the second quarter and in the fourth quarter of 2025, and the stock may continue to stagnate.
But a convincing beat? That could be a game changer.
NFLX Now a Value Stock
After all, despite the series of underwhelming earnings reports and the humiliation of having its apparent winning Warner Bros. bid snatched away by a higher hostile takeover bid from Paramount Skydance, Netflix is doing just fine. The streamer is tracking toward 13.4% revenue growth and 41.5% earnings growth this year. Those compare favorably to 16.5% sales growth and 27.5% EPS growth in 2025. The business isn’t really slowing. And yet, one of the market’s great growth stocks over the last decade-plus is being treated like it has leprosy.
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That makes it a value play. But it also is in desperate need of a catalyst.
Part of the disappointment surrounding the company’s last two earnings reports is not what Netflix said, but what it didn’t say. Namely – how it plans to spend the $83 billion earmarked for the Warner Bros. deal that it ended up having to pocket. Sure, there have been some half-measures – it forked over $200 million to buy the rights to next summer’s Women’s Soccer World Cup and paid an undisclosed amount to air some matches at the Men’s World Cup in 2030 in Spain and Andorra. But the streamer hasn’t made a big, Warner Bros.-like splash. If anything, it’s continuing to save, cutting roughly 1,000 jobs – or 6% of its workforce – this week in its biggest staff reduction since 2022. Wall Street seemed to like the move – NFLX shares were up nearly 3% on Thursday as of this writing. But it’s the latest and most egregious example of the streamer’s sudden austerity and purse-tightening, at a time when many investors have been expecting them to splurge.
Perhaps Netflix is saving for the next big fish. My guess is it will be a major sports property of some kind. As the two new World Cup deals and this summer’s airing of Major League Baseball’s Home Run Derby reveal, Netflix clearly sees live sports as an increasingly vital revenue stream that it has rarely tapped into until recently. For the past two Christmases, it has aired two NFL games, and last month it aired an opening-week NFL game for the first time. I think there’s a lot more coming, maybe something along the lines of Amazon Prime Video’s Thursday Night Football deal or Apple TV’s Friday Night Baseball package.
Netflix Earnings: What to Expect
Nothing seems imminent, though, and I doubt a “big” announcement will be part of next week’s earnings call. Instead, the results may have to speak for themselves. The bar is set fairly high: EPS estimates of 82 cents would mark a 39% improvement over the 59 cents the streamer earned in the third quarter a year ago. To get investors back on board in droves, Netflix will likely need to top that 82-cent estimate by more than a penny or two.
Even absent the first definitive earnings beat in more than a year, I love the stock’s upside from here. It currently trades at a mere 18.7x forward earnings estimates, barely more than half its five-year average valuation and a fraction of the 52x forward P/E it was going for in summer 2025. NFLX has rarely been cheaper. And yet, the company is on track for record sales and earnings this year, with EPS potentially being double what it was in 2024.
That’s a recipe for a monster bounce-back. Now the stock just needs a spark. Perhaps next week’s earnings can provide it.
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