Netflix (NFLX) hasn’t started the new year on a particularly strong note but its upcoming earnings could prove the much-needed catalyst for a stock price recovery.
The mass media behemoth is scheduled to report its Q4 earnings on Jan. 20. Consensus is for it to earn $0.55 a share in the fourth quarter, up nearly 28% on a year-over-year basis.
According to Wall Street analysts, NFLX likely grew its revenue this quarter to about $12 billion as well, reinforcing its lead in the global streaming space.
Ahead of its release, Netflix is down some 34% versus its all-time high.
According to Eric Clark, the chief of investments at Accuvest, long-term investors should consider owning NFLX stock as it’s currently trading at a major discount.
In fact, in terms of valuation, the streaming giant is nothing short of a “diamond in the dumpster” in 2026, he told CNBC in a recent interview.
Netflix is currently trading at less than 9x sales, notably below its historical multiple, signaling the bar for a positive surprise is rather low heading into its earnings release.
In other words, NFLX doesn’t need a “miracle” to rally, a simple “better-than-feared” report with steady subscriber growth would more than suffice.
Much of Netflix shares’ recent turmoil has been related to the “uncertainty” surrounding the firm’s pursuit of WBD assets.
But what has so far been a headwind may transform into a major tailwind if the streamer succeeds in acquiring those assets in 2026.
And reports that NFLX may “sweeten” the proposal soon for Warner Bros. Discovery (WBD) and make it more challenging for Paramount (PSKY) to compete with an all-cash offer already suggest the titan is fully committed to the deal.
Once Netflix brings WBD’s studio and streaming assets under its umbrella, it won’t just get rid of a major overhang, but the sheer boost to its content slate will help it command a premium multiple as well.
While NFLX shares are currently trading below their major moving averages (MAs), Wall Street continues to recommend owning them for the next 12 months.
