Should You Buy Netflix Before It Reports Earnings Next Month?

Core Insights - Netflix is transitioning from a streaming pioneer to a leading global entertainment platform, leveraging a large user base through subscriptions and an expanding ad business [1] Recent Performance - In Q2 2025, Netflix achieved a 16% year-over-year revenue growth and increased its operating margin to 34%, up seven points from the previous year [3] - The company raised its full-year revenue outlook to between $44.8 billion and $45.2 billion, with an expected operating margin of approximately 30% for 2025, an increase from 27% in 2024 [3] - Free cash flow is projected to be between $8.0 billion and $8.5 billion, indicating strong investment and capital return capabilities [3] - Q1 2025 also showed positive results, with a 13% revenue increase and an operating margin rise to about 32% [4] Financial Flexibility - The balance sheet remains strong, with $1.6 billion in stock repurchases in Q2, reflecting confidence in long-term value [5] Revenue Drivers - The ad-supported plan has grown to over 94 million monthly active users globally, enhancing monetization potential without solely relying on price increases [7] - Recent pricing adjustments contributed to double-digit revenue growth in the U.S. and Canada in Q2, while maintaining low churn rates through improved content and product features [8] Long-term Outlook - The overall long-term picture for Netflix appears positive, with reaccelerated revenue growth, expanding operating margins, and increasing free cash flow [11] - Incremental monetization opportunities from advertising and pricing strategies can compound over time, supporting a favorable long-term return profile [11] - Despite a high price-to-earnings multiple of 52, the stock remains an attractive option for investors willing to endure short-term volatility [10][12]