Can Netflix's Streaming Pipeline Spark Holiday Growth in the Stock?

Netflix NFLX reported third-quarter revenues of $11.51 billion, up 17% year over year, despite earnings falling short due to a Brazilian tax dispute. The streaming giant now faces a critical test: Whether its December content lineup can translate into stock momentum after shares declined following the earnings miss.

For the fourth quarter, Netflix projects revenue growth of 17%, driven by members, pricing, and ad revenues, with an operating margin of 23.9%. The company maintained its full-year 2025 revenue guidance of $45.1 billion, representing 16% growth, while adjusting its operating margin forecast to 29% from the prior 30% projection due to the tax matter.

December's content slate features several high-profile releases that could drive subscriber engagement during the crucial holiday period. The final volume of Stranger Things S5 releases on Christmas Day, with the series finale arriving on New Year's Eve. Wake Up Dead Man: A Knives Out Mystery, the third installment with Daniel Craig returning, debuts Dec. 12, following a strong critical reception with a 95% Rotten Tomatoes score. Emily in Paris S5 continues the franchise's trend of global chart dominance, while Troll 2 returns as a sequel to Netflix's biggest non-English movie.

The company's advertising business recorded its strongest quarter ever, with ad revenues on track to more than double in 2025. Netflix faces mounting pressure from elevated content spending on premium series and live events, while operating margins in the second half traditionally compress due to higher content amortization. Intensifying competition from streaming rivals implementing price increases creates additional pricing constraints, potentially limiting Netflix's ability to offset rising production costs through subscriber rate adjustments. Whether this robust content pipeline can overcome these headwinds and reignite investor confidence remains uncertain as the company navigates a challenging streaming landscape.

Netflix Navigates Holiday Streaming Competition

Disney DIS and Amazon AMZN-owned Prime Video services are deploying competing holiday content strategies as streaming rivalry intensifies. Disney continues leveraging its franchise portfolio with Marvel and Star Wars properties while expanding its advertising tier penetration. Amazon Prime Video benefits from bundling advantages within the broader Prime membership ecosystem, offering content alongside e-commerce benefits that differentiate its value proposition. Both Disney and Amazon Prime Video are increasing content investments for the holiday quarter, with Disney focusing on theatrical-to-streaming releases and Amazon Prime Video emphasizing sports programming. The competitive dynamics between Disney and Amazon Prime Video underscore the challenges Netflix confronts in maintaining market leadership amid fragmented viewer attention.

NFLX’s Price Performance, Valuation & Estimates

Shares of Netflix have gained 20% year to date compared with the Zacks Broadcast Radio and Television industry’s return of 21%.

NFLX’s YTD Price Performance

From a valuation standpoint, Netflix appears overvalued, trading at a forward 12-month price-to-sales ratio of 9.01X compared to the broader Zacks Broadcast Radio and Television industry's forward earnings multiple of 4.17X. NFLX carries a Value Score of D.

NFLX’s Valuation

The Zacks Consensus Estimate for NFLX’s 2025 revenues is pegged at $45.09 billion, reflecting 15.61% year-over-year growth. The consensus mark for 2025 earnings is pegged at $2.53 per share, down by 0.1% over the past 30 days. This indicates a 27.78% increase from the previous year.

Netflix, Inc. Price and Consensus

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

NFLX stock currently carries a Zacks Rank #3 (Hold). 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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