Share Resize Reprints Skip to Main Content Skip to Search This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. Netflix Isn't Supposed to Miss Earnings Estimates. Here's What Happened—and Why the Stock Is Dropping. By Angela Palumbo Updated Oct 22, 2025, 7:48 am EDT / Original ...

Key Takeaways Netflix reports Q3 earnings Oct. 21 with revenues projected at $11.5B, up 17% year over year.NFLX content slate, including Squid Game Season 3 and live boxing, drove engagement in Q3.Stock trades at premium 38.18X forward earnings; existing holders should maintain positions.Netflix (NFLX) is slated to report third-quarter 2025 results on Oct. 21. For the third quarter, Netflix projects revenues of $11.526 billion, suggesting year-over-year growth of approximately 17% on both a reported and for ...

Core Insights - Disney has seen a significant 23.1% stock increase over the past six months, outperforming the Zacks Consumer Discretionary sector, rewarding shareholders who remained committed during the company's strategic transformation [1][8] - Despite this positive momentum, it is advised that investors hold their positions rather than increase exposure at current levels while waiting for clearer catalysts and better entry points in 2025 [1][21] Strategic Content Pipeline - Disney's content pipeline for theatrical and streaming releases is designed to drive long-term growth, with major releases planned for fall 2025, including the re-release of Avatar: The Way of Water and the upcoming Avatar: Fire and Ash [4][5] - The live-action division is gaining traction with releases like TRON: Ares and 20th Century Studios' films, showcasing Disney's ability to leverage its intellectual properties [5] - The acquisition of rights to Katherine Rundell's Impossible Creatures book series is a strategic move for franchise development, with potential for a multi-film franchise starting in 2026 [6] Financial Guidance - Disney projects an 18% growth in adjusted earnings per share (EPS) for fiscal 2025, with a target of $5.85, reflecting confidence in operational execution across various segments [9] - The Direct-to-Consumer division anticipates operating income of $1.3 billion, indicating double-digit growth, supporting the streaming transformation strategy [9] - The Zacks Consensus Estimate for fiscal 2025 revenues is $94.87 billion, suggesting a year-over-year growth of 3.84% [10] Operational Challenges - Disney expects $185 million in cruise line pre-opening expenses for fiscal 2025, which may pressure near-term margins [11] - The Experiences segment is projected to grow by 8%, indicating a slowdown compared to historical performance due to normalized demand and increased operational costs [12] - For Q4 fiscal 2025, Disney anticipates over 10 million new subscriptions for Disney+ and Hulu, primarily driven by Hulu, but expects only modest increases in Disney+ subscribers, highlighting potential market saturation [13] Competitive Landscape - The media and entertainment sector is highly competitive, with Warner Bros. Discovery, Netflix, and Amazon posing significant challenges to Disney's market position [14][15][16] - Warner Bros. Discovery's restructuring and diverse content library may create more disciplined competition, while Netflix's scale allows for substantial content investments [15] - Amazon's integration of content with its broader ecosystem strategy provides unique monetization opportunities, making it a formidable competitor [16] Valuation Considerations - Disney's stock trades below historical average valuation multiples, but its premium relative to competitors suggests caution for new investors [17] - The recent stock surge has reduced the valuation discount, indicating a tighter margin of safety for potential new investors [17] - Any disappointments in subscriber growth, theatrical releases, or theme park attendance could lead to multiple compressions, presenting better entry opportunities in the future [18]

Group 1 - Goldman Sachs has revised its outlook on Netflix, expressing growing confidence in the company's ability to maintain momentum through the second half of 2025, driven by a diverse content lineup and resilient user engagement [1][2] - The analyst expects consumption habits, retention, monetization trends, and user growth to remain resilient, despite increasing competition in the streaming space [2] - There is a focus on Netflix's pricing strategies in mature markets, average revenue per user, and competition from platforms like TikTok and Instagram, with a noted push into live entertainment as a potential differentiator [3] Group 2 - Goldman Sachs raised its 12-month price target for Netflix from $1,000 to $1,140 while maintaining a 'Neutral' rating, indicating an approximate 11% downside from the previous session's close of $1,293 [4][6] - Despite Goldman's tempered view, the consensus among 37 analysts tracked by TipRanks remains optimistic, with a 'Strong Buy' rating and an average price forecast of $1,258 [8]

Group 1: Streaming Industry Overview - The streaming space has become highly competitive with major players like Netflix, Disney, and Amazon vying for viewer attention [1][2][7] - Warner Bros. Discovery (WBD) announced plans to separate its streaming services from its TV networks, aiming for sharper focus and strategic flexibility [2][18] - WBD shares have underperformed compared to Netflix but have outperformed the S&P 500 [2] Group 2: Netflix Performance - Netflix has seen a significant stock surge of 85% over the past year, supported by strong financial results and reaffirmation of FY25 guidance [4][5] - The company is projected to achieve 28% EPS growth and 14% higher sales in the current fiscal year [5] - Netflix has maintained subscriber growth, reporting only one quarter of negative growth in the last 12 quarters, and successfully implemented ad-supported tiers [9][10] Group 3: Warner Bros. Discovery (WBD) Performance - WBD's streaming segment reported strong subscriber growth, reaching 122.3 million subscribers, up from 99.7 million the previous year [14] - The majority of subscriber growth came from international markets, with a goal of reaching 150 million global subscribers by the end of 2026 [15]