Should You Buy Netflix Stock Before Oct. 21?

Netflix is set to report Q3 earnings on October 21, with management guidance anticipating accelerating revenue growth to $11.5 billion, a 17.3% increase. This momentum is attributed to the success of its advertising tier, which drives significant new sign-ups and is projected to double ad revenue in 2025, coupled with a record $18 billion content investment, particularly in high-engagement live sports. Despite a current elevated P/E ratio of 51.4, the company's strong profitability and projected 2026 earnings growth suggest a compelling long-term investment case for the streaming giant.

Analysis

Netflix is approaching its October 21st earnings report with significant operational momentum, underscored by management's guidance for accelerating revenue growth. The company projects Q3 revenue to reach $11.5 billion, a 17.3% year-over-year increase, which surpasses the 15.9% growth seen in Q2 and the 12.5% in Q1. This acceleration is primarily fueled by the success of its advertising-supported tier, which now constitutes approximately half of all new sign-ups in available markets and is expected to double its revenue contribution in 2025 as it did in 2024. The company's robust profitability, evidenced by $10.2 billion in net income over the trailing twelve months, is funding a record $18 billion content budget for the year. This includes a strategic expansion into high-engagement live sports, such as NFL games and boxing, which have drawn tens of millions of viewers and serve to increase both subscriber retention and advertising inventory. While the stock's current price-to-earnings ratio of 51.4 appears elevated against the Nasdaq-100's 32.6, Wall Street's forward estimates, projecting earnings per share to grow to $32.39 in 2026, place the forward P/E at a more compelling 37.2, framing the current valuation as a bet on sustained, long-term growth.

Key Decisions for Investors

• Long-term investors should consider the current premium valuation in the context of accelerating revenue growth, driven by the successful advertising tier and strategic content investments in live sports.
• Monitor the upcoming October 21st earnings report closely, as revenue growth exceeding the company's 17.3% guidance would be a strong bullish signal confirming the positive momentum.
• Given the high P/E ratio of 51.4, investors should be prepared for potential short-term volatility if earnings or guidance fail to meet elevated market expectations.
• The investment case is heavily dependent on future earnings growth; therefore, one should weigh the potential for a 38% stock appreciation required just to maintain the current P/E ratio based on 2026 analyst estimates.