VALUATION HIGHLIGHTS

1. International Streaming Subscriptions constitute 60% of the Trefis price estimate for Netflix's stock.
2. U.S. Streaming Subscriptions constitute 40% of the Trefis price estimate for Netflix's stock.

WHAT HAS CHANGED?

1. Q4 2025 Earnings

Netflix posted a better-than-expected set of Q4 2025 results. Revenue reached $12.05 billion, up 17% year-over-year, with earnings coming in at $0.56 per share. Operating income hit $2.96 billion at a 24.5% margin. Paid subscribers topped 325 million globally, driven by Stranger Things 5 and NFL games.

2. Crackdown on password sharing

Netflix has been rolling out its password-sharing option since 2023. Under the offering, subscribers can pay an extra fee if they want to share their Netflix account with people they do not live with. While the company saw some initial subscriber churn due to the rollout, we expect the move will eventually boost revenue. At the end of 2025, Netflix said that it had 325 million paying subscribers.

3. Netflix Ad-Supported Plan

Netflix’s ad-supported plan is helping the company drive subscriber growth as its traditional ad-free plans have become increasingly expensive over the years. The $7.99-per-month U.S. tier has proven attractive in the current environment, with inflation pressuring household budgets and consumer spending. As of November 2025, the ad-supported plan reaches over 190 million global monthly active viewers under Netflix’s updated measurement methodology (users watching at least one minute of ads per month, multiplied by household size).

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Netflix's value that present opportunities for upside or downside to the current Trefis price estimate for Netflix:

Netflix's U.S. Streaming Revenue: Currently, we forecast Netflix's U.S. streaming revenue base to increase from around $20 billion in 2025 to about $36 billion by the end of our forecast period. There could be more than a 5% downside to our price estimate if this figure remains flat going forward. This could happen if the market growth for streaming slows down and competition weighs heavily in the future. On the other hand, there could be around a 10% upside to our price estimate if Netflix blows past expectations and posts about $45 billion in revenue.

Netflix Contribution Margin: We forecast this figure to rise from about 42% in 2025 to close to 49% by the end of our forecast period. However, there could be a downside of about 10% to our price estimate if the margin were to decline to 35%. On the other hand, there could be an upside of about 10% if this figure increased to over 55%.

For additional details, select a driver above or a division from the interactive Trefis split for Netflix at the top of the page.

BUSINESS SUMMARY

Netflix offers online video streaming services to U.S. and international customers, with services available in over 190 countries. Netflix's content is available for streaming through various devices such as PCs, video game consoles, TVs, and smartphones. The company has about 300 million paying subscribers globally.

SOURCES OF VALUE

The majority of Netflix's value is currently hinged on its International Streaming services for the following reasons:

While streaming subscriber growth in the U.S. is expected to moderate, Netflix should see growth in international markets, driven by increasing global broadband and mobile device penetration. The company has also been increasing its investments in regional content to attract audiences.

KEY TRENDS

Netflix's international growth

Netflix's international growth has been solid as it has rolled out its service to many markets. Netflix has been targeting the Asia-Pacific region in a big way, and the market holds a lot of promise for Netflix. Netflix's international subscriber base has grown to nearly 212 million at the end of 2024. While Netflix stopped regularly reporting subscriber figures in 2025, it is likely that the International business has been a key driver of momentum.

Increasing Competition in Online Streaming

Netflix has been facing increasing competition in the streaming space from the likes of Amazon, Disney, Comcast, Paramount, and Apple, who have doubled down on content investments as they look to add new subscribers. The competition could impact Netflix's growth.

Growing Focus On Improving Content and Increasing Original Content

Netflix's original content has improved the perception of the overall brand. The company's original programming has garnered critical acclaim by scoring many award nominations in recent years, including House of Cards, Orange is the New Black, The Crown, and the Stranger Things series, to name a few. Netflix has effectively marketed these exclusive shows to maintain its subscriber momentum.