Netflix Q3 Earnings Preview: Ad Growth in Focus as Valuation and Competition Raise Caution

Netflix (NASDAQ: NFLX) is set to release its third-quarter earnings after the bell, with investors focusing on advertising expansion and live content performance as key growth drivers. The streaming giant’s stock, up about 40% this year, has lagged broader tech peers amid mounting concerns over valuation and user engagement trends.

According to Bloomberg consensus estimates, analysts expect revenue of $11.52 billion, slightly below Netflix’s guidance of $11.53 billion, and earnings per share of $6.94, up from $5.40 a year earlier. The company no longer reports detailed subscriber numbers, shifting focus toward profitability and engagement metrics.

Analysts attribute the quarter’s performance to steady content output and strong live event viewership. The Canelo vs. Crawford boxing match drew over 41 million global viewers, making it the most-watched men’s championship fight of the century. Meanwhile, the animated hit KPop Demon Hunters became Netflix’s most-viewed film ever with 325 million views.

The company’s advertising business remains the centerpiece of its long-term growth plan. JPMorgan projects Netflix’s ad revenue to jump from $1.4 billion in 2024 to $2.9 billion in 2025, then rise another 45% to $4.2 billion by 2026. Recent integrations with Amazon’s DSP have made it easier for advertisers to buy inventory across 11 markets, potentially accelerating adoption.

Still, valuation remains a major concern. The stock trades at 45 times forward earnings, far above its tech rivals. JPMorgan and Citi analysts have cautioned that optimism over ad-tier growth may already be priced in.

Adding to uncertainty, the streaming industry faces consolidation rumors, with Paramount Skydance reportedly exploring a merger with Warner Bros. Discovery. While analysts view a Netflix acquisition as unlikely, a combined rival could reshape the streaming landscape.