Netflix Confident in Revenue Outlook Amid Economic Uncertainty

Post by: Bandan Preet

Netflix executives are confident that the company will continue to grow this year, despite any possible challenges from President Donald Trump's unpredictable plans for tariffs. After a strong earnings report that exceeded what experts had predicted, Netflix co-CEO Greg Peters said the company has not seen any big changes in how customers behave. This statement should help calm fears on Wall Street that Trump's policies could cause people to spend less on streaming services like Netflix.

In after-hours trading, Netflix shares went up by 2.7%. So far this year, the stock has increased by 9%, which is better than the 10% drop in the overall S&P 500 index.

Netflix now has more than 300 million customers worldwide, and the company continues to add new subscribers in different countries. A big reason for this is the popularity of its cheaper, ad-supported option, which was launched in late 2022. Greg Peters said that Netflix has managed to stay strong even in tough economic times in the past, and he expects this trend to continue. He believes that demand for Netflix will remain high.

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The ad-supported option is especially helping Netflix. The company said that in countries where the cheaper tier is available, 55% of new sign-ups are choosing it.

Netflix also announced that its co-founder, Reed Hastings, has stepped down from his role as executive chairman and will now serve as the board's non-executive chair. This change is part of the company’s natural leadership succession process.

Ted Sarandos, Netflix's other co-CEO, said the company is focused on improving Netflix's value for customers. "In tough times, people care a lot about getting good value for their money," Sarandos said. "Netflix is a great value when compared to other options in the market."

Netflix expects its revenue to reach $11.04 billion for April through June, which is higher than what analysts were expecting ($10.90 billion).

For the entire year, Netflix is sticking to its forecast of making between $43.5 billion and $44.5 billion in revenue. This projection includes hopes for strong subscriber growth, higher prices for subscriptions, and a near doubling of the company’s advertising revenue.

For the first quarter of the year, Netflix reported a revenue of $10.54 billion, which was slightly more than the $10.52 billion that analysts had predicted. The company’s earnings per share for the first quarter were $6.61, which also exceeded the expected $5.71. During this period, Netflix released popular content like the limited series Adolescence, the drama Zero Day, and the reality series Temptation Island.

Netflix said its revenue and operating income were higher than expected because of slightly more subscription and ad revenue and the timing of some expenses. However, it also pointed out that ad revenue is still much smaller compared to subscription revenue.

Analyst Paolo Pescatore from PP Foresight believes that Netflix is in a strong position to handle a potential recession. He said that Netflix has become an essential service for many people and that it will likely be the last subscription service that users cancel, thanks to its wide range of programming.

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