NFLX vs. PSKY: Which Streaming Giant Has Better Upside Potential?

Netflix NFLX and Paramount Skydance Corporation PSKY represent two distinct trajectories in the streaming wars. Netflix continues dominating with over 300 million paid households globally, while Paramount Skydance emerges from an $8 billion merger completed in August 2025, combining traditional media assets with streaming ambitions. Both companies navigate the evolving entertainment landscape differently — Netflix leveraging its first-mover advantage and content engine, while Paramount Skydance attempts to transform its legacy empire through integration and cost-cutting.

The timing for comparison is critical as investors evaluate streaming opportunities. Netflix reported stellar second-quarter 2025 earnings with revenues growing 16% year over year to $11.08 billion and raised full-year guidance to $44.8-$45.2 billion. Meanwhile, Paramount Skydance faces integration challenges, targeting $2 billion in cost reductions while revitalizing Paramount+. The question centers on whether Netflix's premium valuation remains justified or if Paramount's discount presents an opportunity.

Let's delve deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.

The Case for NFLX Stock

Netflix's investment thesis rests on unparalleled market position and consistent execution. Second-quarter 2025 results demonstrated remarkable strength with operating margins reaching 34.1%, up 7 percentage points year over year, while free cash flow surged 91% to $2.3 billion. This operational excellence stems from effectively monetizing its massive subscriber base through strategic pricing and successful advertising tier rollout, which management expects to double revenues in 2025. The sophisticated content strategy, balancing global hits with localized programming, drives engagement, with recent successes such as Squid Game and upcoming releases, including Stranger Things Season 5.

Beyond traditional metrics, Netflix diversifies revenues through strategic investments in live programming and gaming. The company's foray into live sports with NFL Christmas games and boxing matches signals confidence in expanding beyond scripted content. Management's bullish outlook is reflected in raised full-year revenue guidance and 30% operating margin target, demonstrating pricing power. The platform's technological advantages, including proprietary ad-tech rolled out globally and AI-driven recommendations, create significant competitive barriers.

Looking ahead, Netflix's growth trajectory appears sustainable despite premium valuation. Capturing less than 10% of global TV viewing hours suggests a substantial expansion runway, particularly internationally, where streaming adoption accelerates. With a robust content pipeline, including Guillermo del Toro's Frankenstein and Noah Baumbach's Jay Kelly, featuring George Clooney and Adam Sandler, Netflix maintains its creative powerhouse position, justifying long-term investor confidence.

The Zacks Consensus Estimate for NFLX’s 2025 earnings is pegged at $26.06 per share, indicating a 31.42% increase from the previous year.

Netflix, Inc. Price and Consensus

Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote

The Case for PSKY Stock

Paramount Skydance presents a complex narrative centered on the transformation potential following merger completion. The combined entity brings valuable intellectual property, including Mission: Impossible and Top Gun franchises, alongside CBS, MTV, and Nickelodeon networks. Second-quarter 2025 Direct-to-Consumer segment showed promise with 15% year-over-year revenue growth to $2.2 billion, while Paramount+ added 10 million subscribers despite distribution agreement headwinds. The streaming-first pivot, combined with Skydance's high-margin production capabilities and AI-driven tools, positions it to compete more effectively.

The merger brings significant financial resources with $1.5 billion capital infusion and Oracle founder Larry Ellison's backing, providing stability during the transformation. Management under David Ellison outlined ambitious plans, including a seven-year, $7.7 billion UFC rights deal for Paramount+, signaling a premium content commitment. Diversified revenue streams spanning theatrical, linear television, and streaming provide multiple value creation paths, with theatrical revenues jumping 84% in the second quarter of 2025, driven by Mission: Impossible – The Final Reckoning.

However, challenges remain substantial. The company faces $11.8 billion in debt against $2.7 billion in cash, creating financial constraints. Linear television revenues continue declining, with TV media revenues down 6% year over year, offsetting streaming gains. Integration risks loom with expected 2,000-3,000 workforce reductions and leadership transitions. While the content lineup includes Tulsa King Season 3 and NCIS: Tony & Ziva, questions persist about Paramount+'s sustainable profitability amid intense competition.

The Zacks Consensus Estimate for PSKY’s 2025 earnings is pegged at $1.48 per share, indicating a 3.9% decline from the previous year.

Paramount Skydance Corporation Price and Consensus

Paramount Skydance Corporation price-consensus-chart | Paramount Skydance Corporation Quote

Valuation and Price Performance Comparison

The valuation disparity reflects vastly different market positions. Netflix trades at P/E 41.71, commanding a premium reflecting investor confidence in leadership, execution, and growth prospects. This appears justified given 30% operating margins, $8 billion annual free cash flow, and 15-17% revenue growth. The stock has gained 41.1% over six months, substantially outperforming the broader Zacks Consumer Discretionary sector and PSKY over the past six months.

NFLX vs. PSKY: P/E F12M Ratio

Conversely, Paramount Skydance's P/E 9.52 suggests market skepticism despite the apparent discount. Shares trade around $15, experiencing volatility since merger completion. The performance divergence extends beyond price movements to fundamental metrics, with Netflix's appreciation supported by tangible improvements while PSKY's stagnation indicates execution concerns.

NFLX Outperforms PSKY YTD

Conclusion

Netflix emerges as the superior investment with proven execution and market dominance, outweighing Paramount's turnaround potential. Netflix's robust fall 2025-2026 pipeline, including Stranger Things finale and premium films, contrasts with Paramount+'s modest slate of Tulsa King and franchise extensions. While PSKY offers merger synergies and discounted valuation, its debt burden, declining linear revenues, and uncertain streaming profitability present risks that Netflix has overcome. Netflix's premium remains justified given superior margins, cash generation, and growth through international expansion and advertising acceleration. Investors should track Netflix for attractive entry points during volatility, while waiting for PSKY to demonstrate successful integration and sustainable profitability. PSKY and NFLX carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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