The Lede
Earnings season is officially here, with Netflix, the first of my holdings, set to report its quarterly results tomorrow, 7/16, after market close. In the previous issue, I mentioned how I set the lofty goal of completing an equity research report before this date. As it turns out, that was a bit unrealistic (without the use of AI and with a 9-to-5) but certainly not a waste of time.
What I’m Learning
Well, I have not completed a “full physical” of Netflix, I did learn a few things as I began working through its examination. The most notable to me thus far is the company’s rapid growth in its advertising business.
Netflix now has over 4,000 advertising clients, up 70% YoY and expects roughly $3B in ad revenue in 2026 (2x that of 2025). Furthermore, if my estimates are correct, its ad revenue only accounted for roughly 3.3% of its total revenue in 2025. Additionally, 60% of Q1 sign-ups were for the ad-supported tier in applicable markets.
I still have a lot of research ahead of me and even more to learn about valuation, but with the stock trading near its 52-week low I can’t help but wonder if Netflix is undervalued at this current moment. I do see a potential path for substantial growth in its advertising business and I’ll certainly be looking for more information on this front come July 16th.
Portfolio Pulse
My portfolio is up roughly 5% YTD headed into Q2 2026 earnings. The research I have done thus far on Netflix, particularly on its advertising business, has increased my confidence going into this quarter’s guidance. I am considering adding slightly to this position. More research reports to come.
The Close
That’s going to do it for this week's issue. Thanks for reading!
- Eric Seel