Netflix(US:NFLX) Benzingaยท2025-11-18 17:42Core Viewpoint - Netflix Inc.'s stock has experienced a significant decline due to investor concerns regarding media deal-making, increasing competition, and uncertainties about the company's future growth trajectory [1][2]. Company Performance - Since the third-quarter earnings report, Netflix's stock has dropped by 11%, underperforming the S&P 500, which saw a 1% decline [2]. - The company has maintained a neutral rating from analysts, with a revised price target of $124.00, down from $127.50 [1]. M&A and Growth Strategy - Investors are questioning Netflix's potential for mergers and acquisitions (M&A), its revenue outlook for 2026, and the growth of its advertising business [3]. - Historically, Netflix has focused on building its content rather than acquiring other companies, having never completed a major acquisition [3]. Advertising Business - Netflix has made significant progress in its advertising segment, with 190 million monthly active ad viewers, an increase from 170 million reported in May [5]. - The company expects ad revenue to more than double by 2025, with projections of a 46% increase to $4.3 billion in 2026 as it shifts towards programmatic sales [6]. Financial Outlook - Analysts forecast steady operating discipline, with normalized expense growth of about 10% in 2025 and 9% in 2026, supporting double-digit revenue growth [7]. - Revenue for 2026 is estimated at $50 billion, with strong margin expansion and free cash flow projected to reach $12.3 billion [7]. Engagement and Market Position - Netflix continues to gain viewing share in the U.S. and key global markets, driven by recent hit releases and a robust second-half slate [8]. - The company is expected to build momentum in 2026 with major franchise releases and expanded live sports programming [8]. Revenue Projections - For the fourth quarter, revenue is projected at $11.96 billion, with adjusted earnings per share (EPS) expected to be $0.54 [9].