Netflix shares jumped about 3% in premarket trading Monday. The streaming giant’s positive annual revenue outlook reassured investors that it could handle an economic downturn amid tariffs.
Co-CEO Greg Peters noted the entertainment sector, and Netflix specifically, had proven resilient during past downturns. Peters said they “had not seen any significant shifts in customer behavior” after the company reported first-quarter earnings above expectations on Thursday.
Netflix reaffirmed its 2025 revenue forecast of between $43.5 billion and $44.5 billion.
These remarks eased investor worries that President Trump’s tariff policies could cause a recession, forcing consumers to cut spending on streaming.
Jeffrey Wlodarczak, an analyst at Pivotal Research Group, stated, “Even in a global recession scenario, Netflix is likely to be highly resilient given the price-to-value of the service remains very attractive.” LSEG data shows Wlodarczak has a five-star rating for estimate accuracy and recommendation performance.
He added, “Their advertising business should demonstrate strong growth in any scenario given its nascent state.”
Netflix reported the lower-priced, ad-supported tier accounted for 55% of new sign-ups in countries where it is available.
BofA Global Research analysts said, “While advertising is a small portion of the business today, the longer-term prospects are notably robust…while investments in ad-tech capabilities should drive healthy growth for years to come”.
Earlier this month, the Wall Street Journal reported Netflix aims to double revenue from $39 billion in 2024 and earn about $9 billion in global ad sales by 2030.
The company has increased focus on consistent revenue growth, because it stopped reporting subscriber data this year, leaving Wall Street with fewer metrics to assess its performance.
Shares of peers Walt Disney and Warner Bros Discovery decreased under 1% each in premarket trading.
At least seven brokerages raised their price target for Netflix after the results. According to LSEG data, the median target is now $1,147.50.
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