Netflix shares rose about 3% in premarket trading on Monday as the streaming giant's upbeat annual revenue outlook reassured investors that it could withstand any economic downturn amid a tariff laden economic climate.
The company's co-CEO Greg Peters noted that the entertainment sector, and Netflix specifically, had proven resilient during previous downturns.
Peters said they had not seen any significant shifts in customer behavior, after the company reported first-quarter earnings above analysts' expectations on Thursday.
Netflix also reaffirmed its 2025 revenue forecast of between $43.5 billion and $44.5 billion.
These remarks offered some respite to investors who were worried that President Donald Trump's tariff policies could likely lead to a recession, forcing consumers to rein in spending on streaming services.
"Even in a global recession scenario, Netflix is likely to be highly resilient given the price-to-value of the service remains very attractive," said Jeffrey Wlodarczak, an analyst at Pivotal Research Group, who is five-star rated for both estimate accuracy and recommendation performance, as per LSEG data.
"Their advertising business should demonstrate strong growth in any scenario given its nascent state," Wlodarczak said.
The lower-priced, ad-supported tier accounted for 55% of new sign-ups in countries where it is available, Netflix said.
"While advertising is a small portion of the business today, the longer-term prospects are notably robust...while investments in ad-tech capabilities should drive healthy growth for years to come," BofA Global Research analysts said.
Earlier this month, the Wall Street Journal reported that Netflix aims to double revenue from $39 billion in 2024 and earn about $9 billion in global ad sales by 2030.
The company has upped the ante on delivering steady revenue growth as it ceased reporting subscriber data from this year, leaving Wall Street with fewer metrics to gauge its health.
Peers Walt Disney and Warner Bros Discovery shares were down under 1% each in premarket trading.
At least seven brokerages raised price target for Netflix following its results, bringing the median target to $1,147.50, according to data compiled by LSEG.
