By Ion Jauregui – Analyst, ActivTrades
Record Results Amid Uncertain Times
Netflix has kicked off 2025 with historic figures, showcasing its ability to grow even in a global environment marked by economic uncertainty and trade tensions. In the first quarter, the company reported a 25% increase in earnings per share, reaching $6.61—well above market expectations. Total revenue rose 12.5% year-over-year to $10.543 billion, and the forecast for the second quarter points to $11.035 billion, driven by price increases and sustained subscriber growth.
Limited Impact from Tariffs
Unlike many companies in the tech and entertainment sectors, Netflix has managed to avoid the impact of tariffs imposed by the Trump administration and the resulting market volatility. The company has not detected any direct negative repercussions on its business, reinforcing its status as a defensive option for investors during times of economic turbulence.
Advertising: Moderate Growth with Potential
While advertising revenues remain modest compared to subscription income, they slightly exceeded expectations this quarter. Monetizing its vast user base through advertising continues to be a priority for 2025. In this regard, the company aims to close the year with revenues between $43.5 and $44.5 billion and an operating margin of 29%.
The Power of Original Content
The appeal of Netflix’s content library remains its main competitive advantage. Original productions like Adolescence, which has become the third most-watched English-language series in history with 124 million views, have been key to its strong financial performance. International titles such as the French series Ad Vitam and Back in Action starring Cameron Diaz and Jamie Foxx have also contributed.
The second quarter also looks promising with the return of iconic franchises like Stranger Things, Wednesday, and the conclusion of Squid Game.
Positive Market Reaction
Following the earnings release, Netflix shares rose 5.2%, reaching $1,024 per share. Year-to-date, they have gained 9.2%, positioning Netflix as one of the most solid performers in the battered entertainment sector.
Technical Analysis
Looking at the chart, since July 2022, the stock has moved through various institutional accumulation zones between 2023 and 2024. The current accumulation zone ranges between $810 and the $1,065.50 level reached in February. Previous highs, now acting as support, are around $688.36. The RSI currently sits in the mid-range following the bullish push that began on April 7. Moving average crossovers indicate some indecision, as the stock is testing a former resistance zone. With Easter ahead, it is likely that the stock will remain range-bound through the end of the month and fail to break this resistance level.
Currently, the stock is trading in the middle of the accumulation channel. Due to low volume and downward pressure below this midpoint, prices may remain sideways unless renewed interest emerges—something unlikely if Europe, Canada, and others impose new tariffs on tech firms (which they haven’t yet done). The inconsistency of Trump’s tariff policy does not fully address the tax waivers enjoyed by U.S. tech firms, which allow them to avoid sharing profits in Europe. Should these waivers be challenged, companies like Netflix could be affected.
The current Point of Control (POC) is well below the two accumulation zones forming the long-term bullish channel, which is somewhat concerning. If regulatory changes occur, the stock could retreat to the lower part of the current accumulation zone—possibly breaking through to its support level. However, if no tariff conflict materializes in the sector, the stock may surge to new highs next quarter due to a strong portfolio structure.
Conclusion: Solid Outlook, But Caution Advised
Netflix has once again demonstrated its resilience in the face of complex macroeconomic conditions, delivering record financial results in Q1 2025. While other companies in the sector are being hit by tariff-related volatility, Netflix remains steady thanks to its strong content catalog, diversified revenue strategy, and stable global user base. However, technical analysis calls for caution: the stock is facing a key resistance level and could come under bearish pressure if new tech tariffs are introduced by Europe or Canada. In the absence of such risks, the stock has the potential to reach new highs next quarter.
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The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.
Record Results Amid Uncertain Times
Netflix has kicked off 2025 with historic figures, showcasing its ability to grow even in a global environment marked by economic uncertainty and trade tensions. In the first quarter, the company reported a 25% increase in earnings per share, reaching $6.61—well above market expectations. Total revenue rose 12.5% year-over-year to $10.543 billion, and the forecast for the second quarter points to $11.035 billion, driven by price increases and sustained subscriber growth.
Limited Impact from Tariffs
Unlike many companies in the tech and entertainment sectors, Netflix has managed to avoid the impact of tariffs imposed by the Trump administration and the resulting market volatility. The company has not detected any direct negative repercussions on its business, reinforcing its status as a defensive option for investors during times of economic turbulence.
Advertising: Moderate Growth with Potential
While advertising revenues remain modest compared to subscription income, they slightly exceeded expectations this quarter. Monetizing its vast user base through advertising continues to be a priority for 2025. In this regard, the company aims to close the year with revenues between $43.5 and $44.5 billion and an operating margin of 29%.
The Power of Original Content
The appeal of Netflix’s content library remains its main competitive advantage. Original productions like Adolescence, which has become the third most-watched English-language series in history with 124 million views, have been key to its strong financial performance. International titles such as the French series Ad Vitam and Back in Action starring Cameron Diaz and Jamie Foxx have also contributed.
The second quarter also looks promising with the return of iconic franchises like Stranger Things, Wednesday, and the conclusion of Squid Game.
Positive Market Reaction
Following the earnings release, Netflix shares rose 5.2%, reaching $1,024 per share. Year-to-date, they have gained 9.2%, positioning Netflix as one of the most solid performers in the battered entertainment sector.
Technical Analysis
Looking at the chart, since July 2022, the stock has moved through various institutional accumulation zones between 2023 and 2024. The current accumulation zone ranges between $810 and the $1,065.50 level reached in February. Previous highs, now acting as support, are around $688.36. The RSI currently sits in the mid-range following the bullish push that began on April 7. Moving average crossovers indicate some indecision, as the stock is testing a former resistance zone. With Easter ahead, it is likely that the stock will remain range-bound through the end of the month and fail to break this resistance level.
Currently, the stock is trading in the middle of the accumulation channel. Due to low volume and downward pressure below this midpoint, prices may remain sideways unless renewed interest emerges—something unlikely if Europe, Canada, and others impose new tariffs on tech firms (which they haven’t yet done). The inconsistency of Trump’s tariff policy does not fully address the tax waivers enjoyed by U.S. tech firms, which allow them to avoid sharing profits in Europe. Should these waivers be challenged, companies like Netflix could be affected.
The current Point of Control (POC) is well below the two accumulation zones forming the long-term bullish channel, which is somewhat concerning. If regulatory changes occur, the stock could retreat to the lower part of the current accumulation zone—possibly breaking through to its support level. However, if no tariff conflict materializes in the sector, the stock may surge to new highs next quarter due to a strong portfolio structure.
Conclusion: Solid Outlook, But Caution Advised
Netflix has once again demonstrated its resilience in the face of complex macroeconomic conditions, delivering record financial results in Q1 2025. While other companies in the sector are being hit by tariff-related volatility, Netflix remains steady thanks to its strong content catalog, diversified revenue strategy, and stable global user base. However, technical analysis calls for caution: the stock is facing a key resistance level and could come under bearish pressure if new tech tariffs are introduced by Europe or Canada. In the absence of such risks, the stock has the potential to reach new highs next quarter.
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.