Netflix Earnings Expectations after Failed Warner Bros. Deal and Price Increase

Quick overview

When the stock market closes on Thursday, Netflix (NFLX) will report their Q1 earnings, and there may be fallout from the unsuccessful Warner Bros. acquisition.

One of the market’s heavy hitters will be reporting on earnings on Thursday after the closing bell. That is Netflix with an estimated revenue of $12.18 billion for the most recent quarter, according got Wall Street, and they will have to account to shareholders on their failed attempt to purchase Warner Bros. Discovery and all its holdings earlier in the year.

Estimates point to $0.76 earnings per share and increasing revenue thanks to their recent price hike. That price markup happened near the end of March, though, so it may not factor much into Netflix’s overall revenue for the quarter.

Netflix’s Disappointment and Fears

Whenever there is a price increase for the streaming service, members invariably cancel their subscriptions. The question is whether Netflix’s increasing rates were enough to make up for lost revenue from departing subscribers. On the high end of the new pricing scale, Netflix is charging customers $27 per month. Adding more members to a plan costs another dollar as well, as Netflix is working hard to crack down on password sharing between separate households.

The company was pursuing Warner Bros. Discovery earlier in the year when that company and its assets went up for sale. For weeks, they courted the media giant but faced  fierce competition from Paramount Skydance. In the end, Netflix backed out following their January Q4 report. Paramount swooped in to acquire Warner Bros., and Netflix went back to focusing on its own assets.

One of their biggest assets is advertising, which is part of their cheapest subscription tier. They made $1.5 billion from advertising last year and expect that number to double in 2026. Already, advertising accounts for around 3% of their total revenue.

By leaving the Warner Bros. deal, Netflix has saved themselves from intense scrutiny over their spending, and they have done so at a time when companies are being watched closely by shareholders over their expenses and how those compare to profits. Netflix avoided the post-quarterly report stock drop that Microsoft, Advanced Micro Devices, and other leading stocks suffered this year when their spending rose sharply. In the current financial environment, shareholders are very worried about capex spending, and Netflix would have entered that conversation in a big way if they had moved forward with the Warner Bros. deal.

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Timothy St. John

Financial Writer - European & US Desks

Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.

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