Netflix is set to release its second-quarter 2026 earnings report on July 16. Here’s Morningstar’s take on what to look for in Netflix’s earnings and the outlook for its stock.
Key Morningstar Metrics for Netflix
- : USD 80.00Fair Value Estimate
- : ★★★Morningstar Rating
- : NarrowMorningstar Economic Moat Rating
- : HighMorningstar Uncertainty Rating
Netflix Earnings Release Date
- Thursday, July 16, 2026, after the close of trading
What to Watch for in Netflix’s Q2 Earnings
- We will be watching whether sales growth accelerates or the company raises 2026 guidance after last quarter’s disappointment. We believe total sales growth will likely need to return to about 15% to ease market fears that organic growth is slowing and prompt reacceleration.
- We’ll observe contributions from domestic and international markets, since price increases should boost growth in the United States this year. We believe that if international growth slows, that’s a bad sign for future growth.
- We will look for any commentary on interest in NBCUniversal being spun out from Comcast or in going after bigger sports rights (like the NFL). Netflix seems to be on the hunt for acquisitions, shifting away from how they’ve historically run their business in an effort to reaccelerate growth.
Fair Value Estimate for Netflix
With its 3-star rating, we believe Netflix stock is fairly valued compared with our long-term fair value estimate of $80 per share. We project a compound annual revenue growth rate of about 10% through 2030, followed by mid-single-digit growth for the past five years of our 10-year forecast. We project average revenue growth in EMEA and Latin America of about 10% annually through 2030 and 8% through 2035, while we project APAC to be the fastest-growing region, averaging more than 16% through 2030 and 11% through 2035.
Read more about Netflix’s fair value estimate.
Economic Moat Rating
We assign Netflix a narrow moat, based on intangible assets. Netflix has two advantages. First, it has no legacy assets that are losing value. Second, Netflix not only had a head start in attracting subscribers, but also had the luxury of overcoming its cash burn—and achieving excess economic returns—during a time when few competitors were keeping it from expanding its subscriber base.
Netflix’s greatest intangible asset is the subscriber base it accumulated before competitors entered the market. Cash generated by loyal subscribers enables the company to continually invest heavily in content. Programming choices have yielded many very popular hits, which in turn have drawn even more subscribers. The additional subscribers have further increased profits, allowing a larger portion to go toward incremental increases in content spending, enabling Netflix to attract premier talent and take many shots at creating hits. This is the virtuous cycle.
Read more about Netflix’s economic moat.
Financial Strength
Netflix is in good financial shape. It ended 2025 with a net debt/EBITDA ratio of 0.4, holding USD 9.0 billion in cash and USD 14.5 billion in total debt. More importantly, the years of cash burn are long behind Netflix, giving the firm a good cash cushion after funding its content budget. Even after investing nearly USD 20 billion in content, we expect USD 11 billion in free cash flow in 2026, with growth each year thereafter throughout our forecast.
Netflix has repurchased over USD 20 billion in shares since 2023. Now that it won’t be acquiring Warner Bros, we expect share repurchases to accelerate. We don’t believe Netflix will be interested in any other large acquisitions; its stock price has traded at relatively low valuations, and the firm likely has few alternative uses for its cash flow. Netflix does not pay a dividend, and we don’t expect it to pay one in the near future, but we think it should.
Read more about Netflix’s financial strength.
Risk and Uncertainty
Our Uncertainty Rating for Netflix is High, largely based on the evolving streaming media landscape and the growing competition the firm faces, including from free streaming platforms.
Netflix has increased its prices over the years, meaning customers now have other streaming options. As the streaming businesses of competitors mature, competitors may build appeal by bundling their services together or offering add-ons, a foothold that Netflix doesn’t currently have. These factors make it possible that Netflix will have a tougher time growing its subscriber base or generating as much revenue per subscriber.
Other factors that bring greater uncertainty include the nascent ad-supported service, which requires the firm to successfully build an advertising business that makes up for the lower price these subscribers pay, and Netflix’s flirtation with major live sports and the potential for more regular-season games, which may promote customer stickiness but typically come at a very high price.
Read more about Netflix’s risk and uncertainty.
NFLX Bulls Say
- Netflix has already attracted a massive customer base and level of profitability. This advantage versus competitors makes it more likely that a virtuous cycle can continue, with the company securing more content that attracts and holds more subscribers.
- Advertising-supported subscriptions open Netflix to a wider pool of subscribers and a major new source of revenue.
- Netflix has significant room to grow in international markets where it has already shown promise with local content.
NFLX Bears Say
- Netflix faces competition it has not faced before. As consumers have more options for quality streaming services, it’s more likely that Netflix could get cut out of some consumer budgets.
- Netflix’s US business is mature, with very high penetration of total households, meaning price increases may need to be a bigger component of future growth.
- Netflix will need to spend more on content—through sports rights and local international investment—to increase membership and prices at rates it has historically, when it worked from a lower base and with less competition.
This article was compiled by Irza Waraich.
