Netflix heads into Tuesday's earnings with a profitable business and a chart that still needs repair. Those two facts can coexist. The stock's October 15 regular close was $72.61, up 2.89% that day, but below both its completed 50- and 200-session averages. This review uses that dated close throughout; it is not a current intraday quote.
What the next earnings report needs to answer
Netflix will report third-quarter results October 20 after the close, according to its company announcement. The questions are whether sales growth is translating into durable operating profit, how advertising is developing, and how much cash remains after funding content and the business.
The latest reported quarter is June, not September. Q2 revenue was $12.56 billion, up 13.37% from a year earlier. Operating income grew 11.07% to $4.19 billion. That left a calculated GAAP operating margin of 33.38%, versus 34.07% a year earlier. Revenue and profit both grew, but profit grew more slowly. Q2 shareholder letter.
For Tuesday, I would start with the operating result and the updated outlook rather than one headline EPS number. Pricing, advertising and content spending need to support each other. Faster sales would be less persuasive if the cost of sustaining them rises faster.
Cash needs its own explanation
June-quarter operating cash flow was $1.74 billion. Subtracting $0.22 billion of cash purchases of property and equipment gives $1.53 billion of company-defined free cash flow, compared with $2.27 billion a year earlier. Content payments already pass through operating cash flow; subtracting them again would count the cost twice. Q2 financial statements.
There is unusual timing in these numbers. The first quarter included a $2.80 billion Warner Bros. Discovery termination fee, and second-quarter cash taxes were partly connected with it. That makes both a simple quarterly cash comparison and a trailing cash figure less representative of an ordinary repeatable year. It is a reason to read the bridge, not a reason to ignore cash generation.
The four latest reported quarterly diluted EPS figures sum to $3.18 on the current split-adjusted share basis. The October 15 close is therefore about 22.83 times reported trailing earnings. That is a historical arithmetic reference, not a forward estimate or a normalized multiple: the termination fee boosts the trailing earnings denominator. It does not establish that the stock is cheap.
The daily chart still has work to do
The full recent decline matters more than one green day. Netflix fell from its June 30, 2025 closing peak of $133.91 to its October 2, 2026 closing low of $67.06, a 49.92% decline. The rebound from that low to October 15 was 8.28%; that close was still 45.78% below the earlier peak. These use different starting points and should not be treated as offsetting percentages.
At the October 15 close, Netflix was above the 20-session SMA of $70.38, but below the 50-session SMA of $75.16 and 200-session SMA of $83.00. All three use completed regular-session closes. The November 2025 share split is already reflected in this history; no second adjustment is applied.
The small October 15 daily range gap was $71.26-$71.34 as of that completed session. It is a dated reference, not a claim that the area must hold in the following session. Beneath it, the September 18 intraday low at $70.11 and October 5 low at $66.54 help frame weakness. The nearby 20-day average belongs in that discussion too.
Above the close, the October 15 high at $73.07 comes first. A surviving portion of the September 18 downward daily gap lay at $73.87-$75.30, overlapping the 50-day average. Reclaiming that cluster would improve the chart; touching it briefly would not complete a daily retest. I want a test and a daily close back above the relevant level. Gaps are reference areas, not guaranteed destinations or turning points.
A business event is not a complete explanation for a price move
Netflix named Peter Rice its next chief content officer on October 15, effective October 26. That is relevant to future content decisions. It does not prove why shares trade in either direction on a particular morning.
The research case is straightforward: a substantial operating margin and growing sales deserve attention, while weaker year-over-year quarterly cash flow and the damaged longer-term chart deserve scrutiny. Tuesday's report can add evidence on growth and spending. It cannot turn an uncertain earnings reaction into a known outcome in advance.
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This is market research only, not a recommendation to buy or sell.