Buy Netflix Stock for a Rebound as Q4 Earnings Approach — Detailed Analysis

Netflix, Inc. (NFLX) is once again in the spotlight as investors anticipate its fourth quarter (Q4) earnings report scheduled to be released after market hours on January 20, 2026. With shares having declined in early 2026 and major strategic developments underway — including a potential acquisition of Warner Bros. Discovery (WBD) — analysts, traders, and investors are debating whether NFLX stock is a compelling buy ahead of the earnings release.

Current Market Context: NFLX Stock Performance Before Q4 Earnings

At the beginning of 2026, Netflix’s stock has experienced a decline, dropping about 6% in the first 11 trading days of the year. This comes after a significant 10-for-1 forward stock split in November 2025 intended to make shares more accessible to employees and retail investors. Despite the split, the stock’s downward trend has raised questions about investor sentiment and potential opportunities.

Analysts note that the post-split decline of around 20% has been influenced by profit taking and broader market weakness, rather than any specific operational crisis at Netflix. This has prompted discussions about whether the stock could rebound — especially if the upcoming earnings exceed expectations.

Expectations for Netflix Q4 Earnings

According to consensus estimates compiled by Zacks, Netflix is expected to report Q4 sales growth of approximately 17% year-over-year, with total revenues approaching $11.97 billion. Earnings per share (EPS) are forecasted to rise as well — potentially up about 28% to $0.55 per share. If these estimates hold, they would represent steady momentum for the streaming giant as it closes out another fiscal year with solid top-line and bottom-line performance.

Looking at the full fiscal 2025 year, Netflix is projected to finish with roughly $45.1 billion in total revenue, an increase of around 15% compared to the prior period, along with a significant rise in annual earnings. This continued growth trajectory — even amid competition from other streaming platforms — highlights Netflix’s strong brand presence and global subscriber base.

Strategic Moves: Warner Bros. Acquisition and Competitive Positioning

One of the most significant developments affecting Netflix’s valuation and future prospects is its ongoing effort to acquire Warner Bros. Discovery for approximately $82.7 billion. This acquisition, if completed, would be transformative — combining Netflix’s global streaming footprint with Warner Bros’ vast content library and the HBO Max platform.

Under this potential deal, Netflix would absorb an additional 95–100 million subscribers, pushing its total global subscriber count beyond 370 million. This would dramatically expand Netflix’s competitive advantage against rivals such as Disney+ and Amazon Prime Video, which also boast massive subscriber ecosystems.

However, the acquisition is not without challenges. Warner Bros. has stipulated that its TV networks division must be spun off before the deal can close, a process expected to take until at least mid-to-late 2026. Additionally, competing bids from Paramount Skydance and Comcast have complicated the landscape, though Netflix currently remains the frontrunner.

Financial Strength: Return on Invested Capital and Valuation Analysis

Netflix’s ability to generate strong returns on capital invested is another key factor in its investment case. With a return on invested capital (ROIC) above 25%, it significantly exceeds the industry average, demonstrating efficient use of capital and strong profit generation from its operations. For many investors, high ROIC is a sign of durable competitive advantages and long-term sustainability.

In terms of valuation, Netflix’s forward price-to-earnings (P/E) ratio has also become more attractive, trading near a multiple of 27X. While this is still above the broader industry average and the S&P 500 benchmark, the premium reflects Netflix’s dominant market position and growth potential in a rapidly evolving entertainment sector.

Analyst Ratings: Is Netflix a Buy, Hold, or Sell?

As of the latest Zacks analysis, Netflix holds a Zacks Rank #3 (Hold). This rating suggests that while the stock may not be a clear buy right now, it could be poised for meaningful upside if earnings and outlook guidance exceed expectations. Premium content investing and strategic expansion are cited as potential catalysts for future price appreciation.

If Netflix reports strong Q4 earnings and provides encouraging commentary on growth initiatives — especially the Warner Bros. transaction — analysts could revise their outlook, potentially pushing the stock into a Buy category. Conversely, weak results or cautious guidance could sustain the Hold rating or lead to downgrades.

Investor Sentiment: What Traders Are Saying

Investor sentiment toward Netflix is mixed, with some traders advising caution while others see the current price levels as a buying opportunity. Discussions on financial forums — including Reddit and financial blogs — show that many market participants view the recent pullback as a chance to accumulate shares at discounted levels, especially ahead of the earnings release.

Others argue that the uncertainty surrounding the Warner Bros. acquisition and possible macroeconomic headwinds justify a more measured approach. Still, even bearish traders recognize Netflix’s strong brand recognition and global subscriber network as key long-term advantages.

Risks and Considerations for Potential Buyers

Investing in Netflix — like any stock — carries risks. Even with strong earnings prospects, several factors could impact performance:

• Acquisition uncertainty: If the Warner Bros. deal stalls or fails to close, short-term volatility could increase.
• Subscriber growth pressure: Although Netflix has shown solid growth, evolving consumer preferences and competition could slow future additions.
• Content spending: High investments in new content and original shows may weigh on margins if viewer engagement does not meet expectations.
• Valuation premium: While more attractive than before, Netflix’s valuation remains above broad industry norms and may be sensitive to changing market conditions.

Long-Term Outlook: Beyond Q4 Earnings

Looking past the Q4 earnings report, many analysts remain optimistic about Netflix’s long-term prospects. The company’s focus on premium content, international expansion, and advertising revenue growth will likely play significant roles in its future trajectory.

Netflix is also experimenting with new revenue segments, such as live sports and gaming integrations, though these initiatives are in early stages. If successful, they could unlock additional earnings streams and further justify a premium valuation in years to come.

Conclusion: Is NFLX a Buy Now?

As the Q4 earnings date approaches, Netflix stands at an important crossroads. Shares have pulled back recently, creating a potentially attractive entry point for investors with a long-term perspective. However, the stock’s performance will depend heavily on earnings results and guidance.

For now, NFLX retains a Hold rating, but a strong earnings beat and positive outlook — especially on strategic moves like the Warner Bros. acquisition — could push it toward a Buy recommendation. Investors should weigh both the risks and potential rewards before adding Netflix to their portfolios.

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