Netflix (NASDAQ: NFLX) saw its stock fall over 5% in early Friday trading, despite reporting a better-than-expected quarterly profit, as investors reacted negatively to the company’s 2025 revenue outlook being lifted mainly due to a weaker dollar, rather than robust user demand.
On Thursday, the streaming giant revised its full-year revenue guidance to $44.8 billion–$45.2 billion, up from $43.5 billion–$44.5 billion. The upgrade was largely attributed to favorable foreign exchange rates, disappointing investors hoping for growth based on stronger business fundamentals.
“Better-than-expected quarterly results and upgraded full-year revenue and cash flow guidance weren’t enough to keep investors happy,” said Dan Coatsworth, investment analyst at AJ Bell.
Coatsworth emphasized that investors were hoping to see growth led by subscriber gains or increased engagement, not just accounting benefits from currency shifts.
Lofty Valuation Raises Skepticism
Netflix’s stock had gained about 43% year-to-date, but it currently trades at a price-to-earnings (P/E) ratio of 43.8, far higher than Disney’s 19.57 and Comcast’s 7.71.
“The muted response to Netflix’s share price… may be down to its lofty valuation,” noted Kathleen Brooks, research director at XTB.
Even though the platform benefited from the popularity of shows like the final season of Squid Game, that success wasn’t enough to reassure investors wary of long-term growth constraints.
Strategy Shift: Ads, Sports, and Monetization
With subscriber growth slowing post-pandemic, Netflix is now focused on boosting advertising revenue. The company is:
- Expanding ad-supported tiers
- Deploying targeted ad placements
- Exploring live sports streaming to attract brands and advertisers
“As Netflix ramps up its advertising revenues combined with underlying strength in the core business, we see a strong runway to drive higher monetization of its engagement,” said analysts at MoffettNathanson.
At least 16 analysts raised their price targets, pushing the median target to $1,365, according to LSEG data — a sign of long-term optimism despite near-term market jitters.
Related: What Would Sacking the Fed Chair Mean for the U.S. Economy and the Dollar?
Sacking the Federal Reserve Chair — a scenario considered extremely rare and constitutionally contentious — would shake market confidence, likely causing:
- A decline in the U.S. dollar, as investor trust in the Fed’s independence erodes
- Market volatility, due to policy uncertainty
- A rise in inflation expectations and interest rates, as credibility in monetary policy declines
- Higher borrowing costs across the economy
Such a move would likely destabilize global financial markets, damage the dollar’s standing as the world’s reserve currency, and lead to long-term economic harm, regardless of short-term political motives.
