Why Netflix shares are Soaring after yesterday's Earnings Report
Netflix has once again reminded the world why it remains the undisputed heavyweight of streaming
On Tuesday, the company’s fourth-quarter 2025 earnings blew past Wall Street’s estimates, sending its stock rocketing over 14% in one session.
With more than 300 million paid memberships now in the books and a brand-new approach to reporting audience size, the only question is how high Netflix can climb from here.
As someone who has spent years analyzing hypergrowth technology and media companies (and sharing those insights with over half a million free subscribers on my Substack), I’m not easily impressed by mere headlines.
However, Netflix’s latest results point to a series of strategic moves that may keep this company’s valuation high well into 2025 and beyond.
Here are the key data points, plus a deeper analysis of why Wall Street is so bullish.
1. Record-Breaking Subscriber Milestone
Netflix’s official subscriber tally jumped to 301.63 million, beating the StreetAccount consensus of 290.9 million. This means Netflix added a whopping 19 million new paid subscribers in just one quarter—a record for the service.
For context, reaching 300 million paid memberships in roughly 16 years of operation is staggering. Even more impressive is that Netflix claims its total “global audience”—including shared accounts—may be above 700 million. That suggests massive latent demand that could be converted into fully paying customers over time.
Key takeaway: My favorite, so-called “law of large numbers,” says growth should slow as a company grows. Netflix defies that logic—indicating that international expansion, live events, and new content verticals fuel impressive new sign-ups.
2. Blazing Past Earnings and Revenue Estimates
Earnings per share (EPS): $4.27 (vs. $4.20 expected)
Revenue: $10.25 billion (vs. $10.11 billion expected)
At scale, beating revenue by even a few hundred million dollars is no small feat. Netflix posted a 16% jump in year-over-year revenue—important in a period when many streaming rivals are struggling to turn a profit. The company also raised its full-year 2025 revenue forecast to $43.5–$44.5 billion (up $500 million from the prior range).
With such robust revenue growth, Netflix is demonstrating that it can convert subscriber momentum into tangible top-line gains even as many of its longtime competitors look for ways to reduce content spending.
3. Pivoting to New Revenue Streams: Advertising & Live Content
One of the most significant shifts for Netflix is its enthusiastic embrace of new revenue sources beyond the standard monthly subscription:
Ad-Supported Tiers
Netflix’s cheaper, ad-supported plans now account for over 55% of sign-ups in regions where they’re offered. Membership in these tiers grew 30% quarter-over-quarter, signaling that this new model resonates with price-sensitive consumers—and crucially, it’s opening the door for a robust advertising business.
“Sufficient scale” for these ad members is expected as soon as 2025, which could position Netflix as a top-tier ad platform in addition to a streaming service. Monetizing this massive audience with targeted ads could drive margin growth that pure subscription-based models struggle to replicate.Live Events
Netflix’s foray into live sports and special events has already borne fruit with the Jake Paul vs. Mike Tyson boxing match and NFL holiday games. These events drew in substantial new memberships, and Netflix says it’s retaining those subscribers longer than expected.
By expanding into live sports, stand-up comedy, and potentially other high-profile events, Netflix can compete on multiple fronts—and broaden its appeal to demographics that never considered Netflix their top streaming priority.
4. Content Still Rules: A Volatile Yet Lucrative Strategy
From “Squid Game” (whose second season debuted in the fourth quarter) to established franchises like “Stranger Things,” Netflix’s content strategy continues to pay off. And this year’s upcoming lineup looks just as formidable:
High-Profile Films: A third “Knives Out” installment directed by Rian Johnson, an Adam Sandler sequel to “Happy Gilmore,” and a new Guillermo del Toro spin on “Frankenstein.”
Prestige Series: “Wednesday” Season 2, “Stranger Things” Season 5, plus brand-new series that Netflix hopes will become the next big hits.
While expensive, the compelling content slate helps Netflix stand out in an increasingly crowded market. And as consumer eyeballs keep shifting from linear TV to on-demand streaming, Netflix’s first-mover advantage and proven ability to release frequent global hits allow it to maintain pricing power.
5. Outlook and Why the Stock Is Rallying
Netflix’s stock soared over 14% on Tuesday for good reason:
Beating Street Expectations: The market loves a company that consistently under-promises and over-delivers on revenue, earnings, and subscriber numbers.
Stronger Forecast: Raising revenue guidance despite economic headwinds underscores management’s confidence.
Operational Diversification: Advertising, gaming, and live sports/events de-risk Netflix from being just a one-dimensional streamer.
Pricing Power: Quiet, incremental price hikes on certain tiers hint that Netflix’s churn rate (the rate at which subscribers cancel) remains low relative to these price changes.
In essence, investors see a proven formula for expansion and sustainable profitability. Netflix has escaped the “streaming wars pinch” that has hurt smaller or less resource-rich peers. And with a strong capital structure plus minimal distractions (they aren’t juggling a media conglomerate’s worth of linear TV networks, for instance), Netflix can keep doubling down on what works—great content, sticky user experience, and now, event-driven brand lock-in.
6. The Last Subscriber Disclosure—But Not the Last Growth Surprise
This quarter was the final time Netflix will disclose quarterly subscriber tallies. Going forward, it plans to issue “engagement reports” twice a year. While some investors might lament losing a key metric, Netflix is signaling that it wants the world to focus more on its overall revenue and profit trajectory. In a sense, it marks a new phase in Netflix’s lifecycle: from hypergrowth upstart to mature media powerhouse.
Final Thoughts: Why Netflix’s Success Is Not a Short-Term Fluke
As someone who’s been publishing in-depth tech and media investment research to a 500,000-strong (and counting) audience, I’ve watched Netflix’s strategy evolve from DVD mailers to streaming pioneers to the content behemoth.
Now, it’s stepping into live sports, interactive events, and advertising. That’s not just one competitive advantage—it’s a portfolio of them, each of which can fortify its moat and magnify its returns.
In the short run, this quarter’s numbers will dominate the headlines. But the truly fascinating story lies in Netflix’s ability to keep adapting—and thriving—amid relentless competition, changing consumer behaviors, and macroeconomic headwinds.
If Netflix remains agile, keeps investing in blockbuster content, and leverages new revenue opportunities (like ads and live events), it has every reason to stay on an upward trajectory.
Disclaimer: Nothing in this article constitutes financial advice. I share these insights as an analyst and observer who has closely followed Netflix and the broader streaming sector. Always do your own research or consult a licensed professional before making investment decisions.
May the LORD Bless You and Your Loved Ones,
Jack Roshi, PhD (MIT, Applied Mathematics)
Lead Quant & Founder