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Shares of Netflix Inc (NASDAQ:NFLX) may finally be showing signs that the worst is over. Falling as much as 40% from last summer’s all-time high, Netflix was one of the worst-performing mega-cap stocks in 2025. Sentiment was washed out, growth prospects were worsening, and as a result, the company went into its Jan. 20 earnings report with very low expectations.
This may have been a good thing, because Netflix shares put in a clear low immediately following its Q4 earnings report and have seemed to hold support since.
Given the preceding selloff, there appears to be a meaningful shift in tone. With earnings now out of the way and lots of downside still fully priced in, the risk-reward balance is leaning firmly in favor of the bulls—let’s take a closer look at just how good it could get.
The Earnings Band-Aid Has Been Ripped Off
The Q4 earnings report wasn’t a blowout, but it didn’t need to be. The company topped analyst expectations on both revenue and earnings, enough to challenge the prevailing bearish narrative and prompt the bears to question their argument.
With revenue up more than 17% year-over-year, free cash flow coming in strong, and a global audience approaching a billion users, the bearish position is starting to look indefensible.
After months of selling, the market was positioned for further disappointment. Instead, Netflix delivered solid, resilient results that are consistent with a business that is still growing, albeit not at the breakneck pace investors were once accustomed to.
Just as importantly, the earnings report removed a major source of uncertainty. For weeks, investors had been sitting on their hands waiting to see whether Netflix would stumble again. With that hurdle cleared, the stock has been given room to breathe.
Price Action Is Starting to Look Good
From a technical perspective, the post-earnings price action is encouraging. Having gapped down at the open the morning after the release, Netflix shares immediately bounced. While it remains to be seen if the stock will break its multi-month downtrend, that kind of behavior is a good start.
This is especially relevant given the broader market backdrop. Equity markets have shifted back into risk-on mode lately, with the S&P 500 already notching fresh record highs. In that environment, deeply discounted mega-cap names with improving fundamentals and bullish price action tend to attract attention.
Analysts Are Leaning Back In
With this kind of setup emerging, it’s no real surprise that the analysts are lining up to call Netflix a buy. In the week since earnings, the likes of Loop Capital, UBS Group, and Robert W. Baird have all reiterated Buy or equivalent ratings. Baird’s $120 price target is particularly noteworthy as it implies there’s upside potential of more than 40% from current levels.
Wedbush has also taken a bullish stance on the stock’s prospects, pointing to the company’s advertising business as a key driver of future upside. The firm expects Netflix’s ad revenue to at least double heading into the rest of 2026, with scope for further growth beyond that as pricing power and engagement improve. When multiple firms converge around a recovery thesis like this after a prolonged selloff, it signals that sentiment is turning.
The Outlook From Here
Still, Netflix is not risk-free. The bears will rightly point out that significant uncertainty remains about the ongoing bidding war for Warner Bros.
However, there is also a growing sense that once that deal closes, regardless of the outcome, a major overhang will be lifted. The market dislikes uncertainty almost as much as bad news, and Netflix has been trading under that cloud for months.
The key for now is price action. Look for Netflix shares to continue holding above last week’s low. If they can do that in the first few weeks of February, the groundwork for a sustained recovery will be in place.