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- NFLX 3Q25 - Uninspiring q? Down $80 after hours. What's next. Bull case $1,550 Bear case $800
NFLX 3Q25 - Uninspiring q? Down $80 after hours. What's next. Bull case $1,550 Bear case $800
Cheat Sheets
In partnership with
NETFLIX (NFLX)
📊 Record Quarter | EPS $5.87 (Miss -16%) | Revenue $11.51B (+17%) | Record TV Share US/UK | Best Ad Sales Quarter Ever | Ads Revenue 2x+ in 2025
Op Margin 28% (vs 31.5% guide, Brazil tax hit) | K Pop Demon Hunters = Most Popular Film Ever | Canelo/Crawford = Most Viewed Championship Fight This Century | Netflix = 7% of Addressable Market, 10% TV Time
💰 Market Cap: $526.3B | 🏢 14,000 Employees | 🌍 300M+ Paid Memberships
👨💼 Co-CEOs Ted Sarandos & Greg Peters | 🎯 ~1B Global Audience | 🇺🇸 Los Gatos, CA
$1,162.18
📉 -$79.17 (-6.38%) Today
+56% YTD | Q3 2025 EPS Miss
Price Targets (12-18 Months)
Current Price: $1,162.18
$1,550.00
Bull Case (+33%)
2026 EPS: $29 | P/E: 53x
Ad Revenue Explosion
🚀 Needs:
Ad revenue triples by 2027, reaching $5B+ annually • Upfront commitments continue accelerating 2x+ annually • Programmatic scales massively with new ad tech stack • Live sports/WWE drive premium ad pricing • K Pop Demon Hunters franchise expands (Mattel/Hasbro toys, sequels) • Operating margins expand to 32%+ • International growth accelerates in APAC/LATAM • Gaming becomes meaningful engagement driver
$1,300.00
Base Case (+12%)
2026 EPS: $27 | P/E: 48x
Steady Growth
⚖️ Needs:
Revenue grows 15-16% to $45.1B in 2025 • Operating margins maintain 29-30% (absent one-time items) • Ad revenue continues doubling trajectory • Free cash flow reaches $9B in 2025 (up from $8-8.5B guide) • Record TV share sustains in major markets (US/UK) • Live offerings (sports, WWE) drive engagement • Content quality maintains edge • International markets grow steadily
$800.00
Bear Case (-31%)
2026 EPS: $23 | P/E: 35x
Competition Crushes
⚠️ Risk:
Ad tier monetization disappoints, revenue growth slows • Competition intensifies, pricing power erodes • International tax issues spread beyond Brazil • Content spending spirals to maintain edge • Live sports become expensive necessity without ROI • Gaming fails to drive engagement • AI-generated content floods market • Multiple compresses to 35x on slower growth expectations
The TL;DR
💰
What Happened
EPS MISS: $5.87 vs $6.97 (-16%) from Brazil tax $1.3B+
Revenue: $11.51B (+17%) IN LINE
Records: Best ad sales quarter ever, TV share dominance US/UK
Content: K Pop Demon Hunters = biggest film ever, Mattel/Hasbro toy deal
Guide: 2025 $45.1B (+16%), FCF $9B raised
TAM: "Only 7% of addressable market"
Revenue: $11.51B (+17%) IN LINE
Records: Best ad sales quarter ever, TV share dominance US/UK
Content: K Pop Demon Hunters = biggest film ever, Mattel/Hasbro toy deal
Guide: 2025 $45.1B (+16%), FCF $9B raised
TAM: "Only 7% of addressable market"
📉
Why It Matters
Brazil = Noise: One-time, business beat without it
Ads Exploding: 2x in 2025, programmatic scaling fast
Content Moat: Biggest film ever, live sports working
TAM Massive: 7% penetrated = years of growth left
Ads Exploding: 2x in 2025, programmatic scaling fast
Content Moat: Biggest film ever, live sports working
TAM Massive: 7% penetrated = years of growth left
⚡
Key Risks
1. Premium valuation, no room for error
2. No 2026 guidance = uncertainty?
3. Brazil tax precedent for other markets
4. Ad revenue timeline still unclear
5. AI threat to content moat
6. Competition intensifying
2. No 2026 guidance = uncertainty?
3. Brazil tax precedent for other markets
4. Ad revenue timeline still unclear
5. AI threat to content moat
6. Competition intensifying
🎯
Management Strategy
Ads: New tech stack, programmatic > upfront
Live: NFL, WWE, boxing, games on TV
Content: Best creators everywhere
AI: Tool not threat, helps storytelling
TAM: 7% penetrated = huge runway
Live: NFL, WWE, boxing, games on TV
Content: Best creators everywhere
AI: Tool not threat, helps storytelling
TAM: 7% penetrated = huge runway
🐂 Bull Thesis
📈
TAM Runway - Only 7% Penetrated
Ted: "Only 7% of addressable market, 10% of TV time in biggest markets = enormous room for growth"
Not Saturated: 300M+ subs but 93% of wallet share uncaptured = years of growth ahead
Pricing Power: Under-monetized relative to value = room for price increases
Not Saturated: 300M+ subs but 93% of wallet share uncaptured = years of growth ahead
Pricing Power: Under-monetized relative to value = room for price increases
💰
Ad Revenue Moonshot
Best Quarter Ever: "More than double ad revenue this year... best ad sales quarter ever"
Programmatic Surge: Growing even faster than upfront = scalable foundation
New Tech Stack: More formats, measurement, ways to buy = just beginning
Programmatic Surge: Growing even faster than upfront = scalable foundation
New Tech Stack: More formats, measurement, ways to buy = just beginning
🎬
Content Moat Working
K Pop Demon Hunters: Biggest Netflix film ever, Mattel/Hasbro unprecedented toy partnership
Live Sports: Canelo = most viewed fight this century, NFL/WWE coming
Record TV Share: Dominating engagement in US/UK markets
Live Sports: Canelo = most viewed fight this century, NFL/WWE coming
Record TV Share: Dominating engagement in US/UK markets
💪
Margin Expansion + FCF
FCF Raised: $9B for 2025 (up from $8-8.5B guide)
Op Margin: 29% target (would be 30%+ absent Brazil), 28-30% sustained
Scale Economics: More subs = spreading costs, incremental revenue high-margin
Op Margin: 29% target (would be 30%+ absent Brazil), 28-30% sustained
Scale Economics: More subs = spreading costs, incremental revenue high-margin
🐻 Bear Thesis
📉
EPS Miss Broke Momentum
The Miss: $5.87 vs $6.97 = -16%, stock down 6.4% despite "one-time" excuse
Trust Shaken: Market now questioning guidance reliability
Valuation Risk: Premium multiple = any stumble = sharp correction
Trust Shaken: Market now questioning guidance reliability
Valuation Risk: Premium multiple = any stumble = sharp correction
💸
International Tax Risk
Brazil Precedent: $1.3B retroactive tax even after favorable 2022 ruling
Other Markets: If Brazil can do it, India/Indonesia/Nigeria could follow
Growth = Complexity: Emerging markets = unstable tax environments
Other Markets: If Brazil can do it, India/Indonesia/Nigeria could follow
Growth = Complexity: Emerging markets = unstable tax environments
🤖
AI Content Threat
Ted Admits: "AI content replacing UGC makes sense" = disruption is real
Content Moat Risk: If AI enables cheap quality content, Netflix's advantage shrinks
Overconfident?: "Not worried about AI" = famous last words
Content Moat Risk: If AI enables cheap quality content, Netflix's advantage shrinks
Overconfident?: "Not worried about AI" = famous last words
⏰
Ad Timeline Uncertain
No 2026 Guide: Greg "refrained from offering any 2026 guidance" = why if so strong?
Small Base: Doubling off small base = when does ads hit 20%+ of revenue?
Competition: YouTube, Meta dominate digital ads = Netflix late to game
Small Base: Doubling off small base = when does ads hit 20%+ of revenue?
Competition: YouTube, Meta dominate digital ads = Netflix late to game
This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making investment decisions.
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