Netflix Shares Edge Lower Premarket Despite Solid Q2 Results and Upgraded Outlook
Netflix (NASDAQ:NFLX) shares ticked lower in premarket trading on Friday, as the company’s strong second-quarter results and upgraded outlook fell short of elevated Wall Street expectations.
The streaming giant reported a diluted earnings per share of $7.19 for the quarter ended June 30, surpassing analysts’ estimates of $7.08, according to LSEG data via Reuters. Revenue totaled $11.08 billion, just slightly above the forecasted $11.07 billion.
Growth was driven in part by the final season of its global hit “Squid Game”, along with subscription price hikes and a continued increase in membership. Notably, revenue from the U.S. and Canada — Netflix’s largest market — grew 15% year-over-year, up from 9% growth in the previous quarter, boosted by price adjustments earlier in the year.
Netflix credited its year-over-year revenue increase to a combination of subscriber growth, higher pricing, and stronger advertising income.
The company also noted that it is nearing the conclusion of 2025 upfront advertising negotiations with major U.S. agencies, and reiterated its expectation for ad revenue to approximately double year-over-year.
To reflect momentum, Netflix raised its full-year revenue guidance to between $44.8 billion and $45.2 billion, up from its prior forecast of $44.5 billion. It also lifted its operating margin forecast to 29.5%, from a previous estimate of 29%.
However, some of the upgraded outlook was attributed to a recent decline in the U.S. dollar, which analysts at Vital Knowledge described as a “low-quality” source of upside.
Analysts at Jefferies added that while the full-year forecast was roughly in line with investor expectations, the results “did not significantly exceed” consensus figures, which may have contributed to the muted stock reaction.
Despite Friday’s dip, Netflix shares have gained over 43% year-to-date, fueled by optimism about the company’s continued dominance in the competitive streaming market and its strategic expansion into areas like live events and advertising.
