Netflix Earnings Crush Expectations, Yet Stock Tumbles Amid Fierce Streaming Wars

Netflix just delivered another knockout earnings report—subscriber growth smashed forecasts, revenue surged past targets. The numbers don't lie. But Wall Street? It yawned and hit the sell button.

The Contradiction Explained

Here's the market's cold logic: past performance is just that—past. Every legacy media giant now has its own streaming fortress. Disney+, Apple TV+, a dozen others—they're all slicing the pie thinner. Netflix's moat looks more like a trench these days.

The Growth Engine Question

The real worry isn't this quarter's hit show. It's next quarter's, and the one after that. Can the content machine keep churning out must-watch series at a price that keeps subscribers hooked and shareholders happy? The cost of that arms race is staggering.

So the stock drops. It's the classic finance two-step: beat estimates, then get punished for the uncertainty ahead. A cynical take? It's priced for perfection but operates in chaos. One miss, and the narrative flips faster than you can say 'password sharing crackdown.'

Netflix Stock Earnings, 2026 Outlook, And Global Subscribers Growth

Fourth Quarter Financial Performance

The fourth quarter performance showed that Netflix stock earnings reached net income of $2.42 billion, or 56 cents per share, which represents a significant increase from $1.87 billion during the same period a year earlier. Revenue during this period ROSE 18% year over year, and several factors drove this growth including the expansion of the company’s ad-supported membership tier. The ad-supported option, which launched back in late 2022, continues gaining momentum, with Netflix news revealing that 2025 ad revenue grew by more than 2.5 times from 2024 to over $1.5 billion.

The streaming platform continues expanding its subscriber base steadily, and the company reached 325 million global paid subscribers by the end of the fourth quarter. This figure represents a new milestone for Netflix, which had not reported membership numbers for a year prior to this announcement. The company’s diverse content offerings and expansion into ad-supported tiers fueled the subscriber growth.

Co-CEO Ted Sarandos had this to say about the company’s strategy:

Global Subscriber Milestone And Content Strategy

When it comes to subscriber acquisition, Co-CEO Greg Peters addressed questions during the earnings call and stated:

Looking ahead, the company expects Netflix 2026 overall revenue to range between $50.7 billion and $51.7 billion. This projection is based on anticipated increases in membership and pricing, as well as a projected rough doubling of ad revenue in 2026 compared to the prior year. Peters also addressed internal financial targets that had been outlined in a Wall Street Journal report from April, and he clarified that these were “long-term aspirations” and not to be confused with a forecast.

Sarandos highlighted some Netflix news around the NFL games performance:

Warner Bros. Acquisition And Market Competition

The quarterly report comes amid the backdrop of Netflix’s proposed transaction of Warner Bros. Discovery’s streaming and film studio assets. The company announced in December that it had agreed to acquire streamer HBO Max and the Warner Bros. film studio for $27.75 per WBD share, or an equity value of $72 billion. Earlier on the day of the earnings report, Netflix amended its offer to be all-cash and said it WOULD pause share repurchases to fund the acquisition.

Stock Price Reaction And Competitive Pressures

The Netflix stock earnings beat didn’t shield the company from market skepticism, as competitive dynamics continue to intensify across streaming. During the earnings call, both Sarandos and Peters highlighted how rivalry now extends beyond traditional streaming services to encompass legacy television networks and even social video platforms like YouTube. These market forces are driving up costs for premium content acquisition.

Investor reaction to the Netflix stock price tells a different story than the earnings numbers suggest. Concerns about escalating program budgets and aggressive bidding wars for top-tier content have weighed heavily on shares. The stock has declined nearly 30% since October, when speculation first emerged about the Warner Bros. deal. Regulatory uncertainty surrounding the proposed acquisition has also contributed to investor caution, with lawmakers and industry observers questioning whether antitrust authorities will approve such a massive consolidation.

Moving forward, Netflix must walk a tightrope between investing heavily in quality programming while preserving profitability—a balancing act that becomes more difficult as competition for viewers and content intensifies at the time of writing.