Wall Street Remains Mostly Bullish on Netflix Stock Despite Softer Q2 Forecast

Netflix shares were down 10% in premarket trading Friday after the streaming giant reported a slight beat in first-quarter 2026 revenue but forecast lighter-than-expected Q2 sales and operating income.

For Q2, Netflix forecast revenue growth of 13% and operating margin of 32.6% (compared with 34.1% in the year-ago quarter); it said operating income will be lower because increases in content amortization will be higher in the first half of 2026 “due to the timing of title launches.” Those metrics were slightly under Wall Street’s previous consensus estimates. The company said Q2 is expected to have the highest year-over-year content amortization growth rate in 2026, before decelerating to “mid-to-high single digit growth” in the second half of the year.

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“Netflix’s narrow Q1 beat, soft Q2 guidance, and Reed Hastings’ decision to leave the Board left investors less sanguine this quarter,” Wedbush Securities analyst Alicia Reese wrote in a note issued Friday. That said, “our survey work indicates resilience to price increases, while ad growth should drive meaningful upside later this year.” The firm kept its “outperform” rating on Netflix stock, with a 12-month price target of $118.00/share.

Meanwhile, investors may have hoped that Netflix’s recent U.S. price increase — which happened about 14 months since its previous hike, sooner than it has historically made such increases — would goose the bottom line. But the company kept its full-year revenue guidance unchanged, reiterating its previous forecast of $50.7 billion-$51.7 billion for 2026.

Co-CEO Greg Peters explained on Netflix’s earnings interview that the initial full-year guidance already factored in “pricing adjustments that we expect to make throughout the year” — and he added that “It’s very rare that we have an unexpected or, call it, surprise pricing change.”

Netflix’s Q3 of 2026 should reflect “the full impact” of the U.S. pricing change, while the company also announced price increases in Spain on Thursday, TD Cowen analyst John Blackledge wrote (maintaining a “buy” rating and $112.00/share target). He said Q2 engagement “should benefit from a solid content slate,” including returning hits like the second seasons of “Beef” and “Temptation Island.”

“Engagement remains a key debate, as 1Q26 watch hours grew at a similar rate to the 2% growth in 2H25, while engagement quality hit a new all-time high,” BMO Capital Market’s Brian Pitz wrote in a research note. “Advertising continues to scale as fill rates improve, and 60% of all new subs in ad-tier regions sign up for the ad-supported tier. Our estimates are largely unchanged as we fine-tune them.” He reiterated his “outperform” rating and $135/share target price on Netflix.

Ralph Schackart, an equity research analyst at William Blair, said Netflix has “plenty of runway for continued growth.” He maintains an “outperform” rating on the stock with a $107.79/share target. The streamer still accounts for only about 5% of TV viewing share globally and has penetrated less than 45% of its total addressable market for broadband households, he noted. In addition, Netflix reiterated in reporting Q1 earnings that is advertising business is on track to roughly double in 2026 to $3 billion in revenue. And the company believes its share of programmatic advertising is quickly approaching half of all non-live ads it delivers, further diversifying this offering, Shackart noted.

Not everyone on Wall Street is upbeat on Netflix’s outlook. Jeffrey Wlodarczak, analyst at Pivotal Research Group, maintains a “hold” rating on the stock with a year-end 2026 target of $96/share. “We remain concerned that short-form entertainment (such as TikTok, Instagram, X, YouTube Shorts and Snap) is doing to streaming what streaming has done to traditional TV,” particularly among Gen Z consumers, he wrote in a note.

“Our overall view is that NFLX is properly valued at current levels and we believe increasingly growth is likely to be driven by price increases (and advertising gains off a relatively low base) rather than subscriber growth,” according to Wlodarczak. “We view the story as lacking excitement relative to a rich valuation.”

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