Investors show lukewarm reaction to Netflix’s Q2 report, with stock down 5%. Despite favorable results, profit-taking may be a factor. Q2 net income exceeds expectations at $3.13 billion, with EPS up 47% year over year. Operating margin at 34.1%, free cash flow up 91% to $2.3 billion.

Netflix adds 5.1 million subscribers in Q2, below forecasts. Total subscribers pass 300 million. Revenue guidance raised to $44.8-$45.2 billion for 2025. Operating margin guidance slightly increased. P/E valuation at 50X forward earnings, higher than competitors.

Netflix stock labeled a Hold with high growth expectations priced in. EPS growth forecasted at over 20% for FY25 and FY26. Investors may have expected more upside surprises in Q2. Consideration for holding due to market dominance and growth potential.

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Source: Zacks Investment Research.

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