Market Prep: Earnings season
NFLX
Hello Traders,
Today’s post will be very short, as all attention is currently on Davos and Netflix. Regarding market volatility, the view we posted on Saturday remains unchanged.
NFLX 0.00%↑ Netflix
Analysts are viewing this report as a high-stakes turning point. While the company’s core financials remain strong, the stock has been under significant pressure—down roughly 30% from its 2025 highs—due to uncertainty surrounding a massive $82.7 billion bid to acquire Warner Bros. Discovery (WBD).
Wall Street expects robust year-over-year growth, driven by the holiday content slate and the maturing ad-supported tier:
Revenue: Expected $11.97 billion (+16.8% YoY).
Earnings Per Share (EPS): Expected $0.55 (+28% to 29% YoY).
Global Memberships: Analysts are looking for the total base to cross 312 million.
The biggest concern for analysts is the potential acquisition of Warner Bros. Discovery. This has shifted the “bull case” for Netflix from a lean, high-free-cash-flow machine into a more complex story involving:
Debt & Leverage: Analysts are “wary” of the heavy debt load required for the $82.7 billion deal.
Regulatory Risk: There is significant uncertainty about whether regulators will allow such a massive merger.
Strategic Pivot: Investors are questioning if this move away from organic growth toward massive M&A will hurt Netflix’s high-margin profile.
Analyst Sentiment & Price Targets
Despite the recent stock slump, the overall consensus remains a “Moderate Buy.”
Bulls argue the 30% drop is a “steal” and an entry point, citing Netflix’s dominance and the untapped potential of its ad-tech platform.
Bears point to the maturing US market and the existential threat of AI-generated content (TikTok/YouTube) competing for “eyes.”
Price Targets: Most analysts have recently lowered their targets due to the WBD deal risks, with many now clustered between $100 and $130 (post-split levels).
Now let’s take a look at what option positioning is showing us:
