Netflix Q1 2026 Preview: The 3 Metrics That Could Move the Stock

When Netflix (NFLX 0.43%) reports first-quarter 2026 earnings on April 16, Warner Bros Discovery will no longer be a distraction. That means investors will pay more attention to factors like ad revenue, margins, and free cash flow.

Depending on what happens with those, we’ll likely see the stock price find its next short-term direction.

Image source: Getty Images.

No. 1: Ad-based revenue

In 2025, ad revenue of about $1.5 billion accounted for roughly 3% of Netflix’s total revenue. At an expected $3 billion in 2026, ad revenue should make up close to 6% of total revenue.

As long as unexpected issues don’t pop up and the rest of the earnings report is strong, ad revenue climbing as fast or faster than expected could be bullish for Netflix shares. Outperformance on that front would show that the streaming giant has another level to pull to boost revenue besides subscription price increases, and that ad sales can be a strategic growth engine.

If ad revenue looks weak and is paired with other underwhelming metrics, that could send the stock price lower after the report.

No. 2: Margins

Netflix says it plans to spend $20 billion on content this year, which can be valuable for the company in the long term, as its large and growing catalog of unique content helps it not only attract new subscribers but also retain them.

In the short term, though, investors may worry about how outlays that large affect its profitability, as management’s operating margin guidance of 31.5% for 2026 was already below analysts’ expectations.

If Q1 2026 offers an early preview that margins could be even lower than previously forecast, and if management revises its forecasts downward, that would be concerning for shareholders.

If the opposite happens and margins look as expected or better, and are part of an overall strong earnings report, that could help send the stock price higher.

No. 3: Free cash flow

Robust free cash flow will remain important, as it can help the company fund its extensive content production plans. And some of that cash will also be used for shareholder-friendly moves, such as stock buybacks.

After Netflix walked away from its bid to acquire most of Warner Bros Discovery, it announced on Feb. 26 that it would resume its stock buyback program.

Free cash flow is forecast to be roughly $11 billion in 2026. Just as with the ad revenue and margins, shareholders will want to pay close attention to management’s comments on free cash flow.

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NASDAQ: NFLX

Netflix

Today’s Change

(-0.43%) $-0.39

Current Price

$91.35

Key Data Points

Market Cap

$387B

Day’s Range

$90.70 - $91.66

52wk Range

$75.01 - $134.12

Volume

838K

Avg Vol

48M

Gross Margin

48.59%

Looking beyond Q1

Knowing what to watch for in the upcoming quarterly report can help with setting expectations, but what’s more important is establishing a long-term investing framework. That can help you as an individual investor to limit your knee-jerk reactions to any single set of results.

When building your Netflix investment thesis for the long term, I recommend considering the potential of its noncore growth opportunities in areas such as ad revenue, video podcasting, gaming, and its Netflix House themed entertainment venues, and how they could add to its powerful streaming business.