Netflix (NFLX 2.32%) operates the world's most popular streaming platform for movies and television shows, with more than 300 million paying subscribers. Its stock has almost doubled over the past year and is currently trading near a record high, as investors price in the company's strong revenue and earnings growth.
Netflix is scheduled to release its financial results for the second quarter of 2025 (ended June 30) on July 17. The company has forecasted yet another strong report, but there is one thing standing in the way of further upside in its stock. So, should you buy it ahead of next Thursday?
Image source: Netflix.
Live events are cementing Netflix's dominance
As the streaming industry's undisputed leader, Netflix has immense scale, which it's using to out-spend its competitors. The company says it will invest around $18 billion to create and license content during 2025 alone, and it has a growing focus on exclusive live events, which differentiate its platform from the competition.
Netflix showed both Christmas Day NFL games last December, and they attracted around 30 million viewers each, which made them the most streamed matches in the sport's history. The platform also livestreamed the blockbuster Mike Tyson vs. Jake Paul boxing match in November, and The Roast of Tom Brady before that in May, both of which were raging successes.
In 2025, Netflix recently became the home of World Wrestling Entertainment (WWE) under a 10-year deal with TKO Group. The platform shows WWE Raw live each week worldwide, and it will show special events like SummerSlam and WrestleMania internationally each year. Fans will also enjoy more live boxing on Netflix this year, with the third rematch between Katie Taylor and Amanda Serrano streaming on July 11, followed by Canelo Alvarez vs. Terence Crawford in September. The NFL will also return on Christmas Day.
Aside from bringing in more paying subscribers, live events give Netflix a massive opportunity to attract advertisers. The company now offers three subscription tiers: Premium ($24.99 per month), Standard ($17.99 per month), and Standard with ads ($7.99 per month). The ad-supported tier regularly accounts for around half of all signups in countries where it's available, so Netflix has a growing opportunity to sell ad slots to businesses.
In fact, Netflix's advertising revenue doubled in 2024, and management expects it to double again in 2025. More live programming will only support that trend.
NASDAQ: NFLX
Key Data Points
Netflix forecasted another strong quarter
Netflix generated a record $10.5 billion in revenue during the first quarter of 2025, which was a 12.5% increase from the year-ago period. It also delivered $6.61 in earnings per share (EPS), which was up 25.1%. Netflix remains one of the only pure-play streaming companies generating consistent (and growing) profits, which facilitates the significant content spending I mentioned earlier.
Netflix will report its financial results for the second quarter on July 17. According to management's guidance, the company likely generated just over $11 billion in revenue, representing accelerated year-over-year growth of 15.4%. At the bottom line, investors will be looking for $7.03 in EPS, which would be up by a whopping 44.1%.
Investors should also keep an eye out for any changes to Netflix's full-year guidance. As of the last update, the company was targeting between $43.5 billion and $44.5 billion in total revenue in 2025, but if management increases that number in the July 17 report, it could add fuel to the bullish sentiment surrounding Netflix stock.
Should you buy Netflix stock before July 17?
Here's where things get tricky for investors. Netflix stock is trading at a price-to-earnings (P/E) ratio of 60.9 as of this writing (on July 8), which is near the highest level in three years. It makes the stock almost twice as expensive as the Nasdaq-100 index, which is home to most of Netflix's big-tech peers. The average Nasdaq-100 component trades at a P/E ratio of just 32.3.
Netflix's premium valuation might be a barrier to further upside in the short term, even if the company's Q2 results come in above expectations. Therefore, investors who are seeking a quick return should probably avoid the stock for now, because the risk-reward equation doesn't make much sense.
However, there could be some upside on the table for investors with a longer-term horizon. Wall Street's consensus estimate (as provided by Yahoo! Finance) suggests that Netflix could deliver around $30.87 in EPS during 2026, which places its stock at a forward P/E ratio of 41.6. That doesn't make the stock cheap, but it would have to climb by 46% over the next 18 months just to maintain its current P/E ratio of 60.9.
NFLX PE Ratio data by YCharts.
However, there is a caveat. I think a P/E ratio of 60.9 is unsustainable over the long term, especially if Netflix's earnings growth eventually slows down. As a result, investors who buy the stock today might have to look beyond 2026 to maximize the chances of earning a positive return, because it will give the company time to grow into its valuation. Holding on for the next five years (or more) would be ideal.
Buying Netflix stock ahead of July 17 probably won't yield a materially different result compared to buying it a short time later, as long as investors stay focused on the long run.
