Netflix is set to kick off its earnings season for media companies with a highly anticipated report on Thursday. Investors are looking for insights into the company’s future trajectory, particularly following its recent decision to walk away from a proposed deal to acquire Warner Bros. Discovery (WBD). Analysts from LSEG have provided estimates for Netflix’s first-quarter performance, which suggest earnings per share could reach 76 cents, alongside projected revenue of $12.18 billion.
In the previous earnings call, Netflix’s management had focused on their interest in WBD’s streaming and film assets, as well as the company’s advancements in its advertising business. However, just weeks after their January earnings update, the streaming giant decided to abandon its pursuit of WBD after Paramount Skydance presented a more favorable offer for the entire Warner Bros. Discovery entity.
This shift has left analysts and investors in a different mindset as they head into the upcoming earnings report. “Heading into earnings, Netflix finds itself in a very different spot than many expected just a month and a half ago,” noted Mike Proulx, vice president and research director at Forrester. “We were supposed to be talking about the company’s progress toward closing the Warner Bros. deal. Instead, the question now is how Netflix competes in a streaming market that’s likely to get more crowded at the top.”
Despite stepping back from the WBD acquisition, Netflix’s stock has seen notable growth, rallying over 25%. Analysts from Deutsche Bank indicated that this decision has allowed the company to avoid significant debt, regulatory scrutiny, and the complexities associated with integrating a large acquisition. The focus for Wall Street has shifted back to Netflix’s engagement strategies, pricing decisions, and its evolving advertising model.
Since launching its ad-supported tier in late 2022, Netflix’s advertising business has begun showing promising results. Management stated that the cheaper option is gaining traction after a slow start. By the end of 2025, Netflix reported advertising revenue exceeding $1.5 billion, accounting for around 3% of its total revenue, with expectations to double that figure in 2026.
In a changing landscape where subscriber growth has become less critical, especially after the company recorded its first subscriber loss in ten years in 2022, a shift in investor focus has occurred. Media companies, including Netflix, are now prioritizing profitability over sheer subscriber numbers, reflecting a broader trend in the industry. To support this strategy, Netflix raised prices again in late March, which analysts believe will contribute positively to its 2026 revenue.
In January, Netflix announced a new milestone of 325 million global paid subscribers, a figure that underscores the company’s ongoing expansion despite previous challenges. As the story continues to develop, investors and industry watchers will be keenly observing the upcoming earnings report for further clarity on Netflix’s strategic direction in an increasingly competitive streaming landscape.
