Netflix earnings in focus as shares gain slightly amid growth concerns

Netflix Inc. shares rose marginaly on Thursday as investors awaited the streaming giant's second-quarter earnings report, scheduled to be released after the closing bell. The results are expected to provide fresh clues on subscriber growth, user engagement and the company's ability to navigate an increasingly competitive streaming landscape.

At 1:28 p.m. EDT, Netflix shares were up 0.44%, or 32 cents, at $74.00, although the stock has remained one of Wall Street's biggest laggards over the past year amid persistent concerns over its growth strategy and long-term prospects.

The streaming company's shares have plunged about 45% since reaching an all-time high on June 30, 2025, making Netflix one of the 20 worst-performing stocks in the S&P 500 during that period. The decline has erased nearly $257 billion in market value.

The stock has also fallen roughly 31% since mid-April, when Netflix reported disappointing guidance alongside the announcement that co-founder and Executive Chairman Reed Hastings would step down. Investor sentiment was further dented after Netflix exited the bidding for Warner Bros. Discovery, which was eventually acquired by Paramount Skydance.

Despite the sharp correction, Netflix's valuation has become significantly more attractive. The stock currently trades at around 20 times projected earnings over the next 12 months, well below its 10-year average forward price-to-earnings multiple of 51. As recently as April, Netflix was valued at more than 30 times forward earnings, and it now trades at a slight discount to the broader S&P 500, a rarity not seen since 2022.

However, valuation alone has not been enough to ease investor concerns. Questions over subscriber engagement and intensifying competition continue to weigh on sentiment. Last month, Meta Platforms revealed plans to explore new formats for its Instagram for TV platform, signalling increased competition in digital entertainment.

At the same time, movie theatres have staged a stronger-than-expected recovery, with audiences turning out in large numbers for surprise box-office hits such as Backrooms and Obsessions. Cinema-related stocks, including Cinemark Holdings, IMAX Corp. and AMC Entertainment Holdings, have comfortably outperformed Netflix so far this year.

Against this backdrop, the upcoming earnings report is widely viewed as a pivotal moment for the company. Adding to investor anxiety, Netflix shares have declined after each of the company's last four quarterly earnings announcements.

Wall Street expects Netflix to report second-quarter revenue of about $13 billion, representing a 14% year-over-year increase, while earnings per share are projected to rise 10% to 79 cents.

Beyond the headline numbers, investors will closely watch engagement metrics, which are seen as a key indicator of subscriber retention and future revenue growth. Netflix has reportedly faced challenges in keeping viewers engaged with original series beyond their first season and has explored options such as introducing live television channels and bundling third-party streaming subscriptions to strengthen its platform.

The company has also been linked to several acquisition opportunities. According to reports, Netflix recently lost out to Fox in the race to acquire Roku. It was also reportedly among the companies evaluating a bid for Lionsgate, although Netflix later denied it was pursuing the studio.

Meanwhile, research firm M Science recently flagged weakening user trends, estimating that Netflix could post its lowest quarterly global net subscriber additions since 2022, raising the stakes for the company's latest earnings release.