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As markets swirl amid tariffs and trade war concerns, one company is looking rather recession-proof: Netflix (NFLX).
The company was one of the rare bright spots in trading Monday, rising almost 2% after delivering a blockbuster first quarter that had experts comparing the company with Big Tech instead of Big Media. Netflix posted nearly $3 billion in profit and a 31.7% operating margin on $10.5 billion in revenue.
Netflix is outperforming both the S&P 500 and Nasdaq indices as of midday Monday, which had declines of 2.8% and 3.1%, respectively. The company is up 12% year-to-date, while the S&P and Nasdaq are down 12.5% and 18%.
An analyst report from William Blair said Netflix is “currently not experiencing economic headwinds with stable retention” after its strong quarter. The financial services firm maintained its “outperform” rating for Netflix’s stock.
“Netflix is relatively more insulated from the recent market turmoil because it is not overly exposed to tariffs and will be relatively resilient in any potential future economic downturn,” analysts Ralph Schackart and Jack Brenczewski wrote in the report. “Overall, Netflix remains well positioned to remain a secular streaming winner, in our view, and we believe longer term it will continue to have pricing power.”
The report’s key takeaways included that price hikes are performing in line with expectations and retention is strong and stable; that the advertising business is successfully scaling; and that Netflix’s large, monetizable audience should allow the company to maintain its edge over competitors.
“Netflix disclosed its audience is larger than 700 million people, with more than two-thirds of the audience outside the United States,” analysts wrote. “Given its content diversification strategy of making original content for global countries, this should allow the company to maintain its scaled competitive advantage.”
Netflix expects its second quarter revenue to be slightly above Wall Street’s expectation at roughly $11 billion. Its 2025 revenue is still expected to be between $43.5 and $44.5 billion.
Netflix does have areas where it can improve, however, according to the William Blair analysts. Namely: its advertising product. Earlier this month, the company rolled out its ads suite in the U.S. and will start rolling its product out to other advertising markets.
“In our view, this is important because the advertisers we have spoken with suggest Netflix needed to improve its advertising platform. The new platform will provide advertisers with better measurement and targeting, new ad formats, and advanced programmatic capabilities,” the analysts wrote.
The company is looking at other ways to expand, too. Netflix co-CEO Ted Sarandos said in an earnings call Thursday that video podcasts may be the next format to land on the platform, potentially pulling business from Spotify (SPOT) and YouTube (GOOGL).
Other analysts shared William Blair’s optimism. JPMorgan Chase (JPM) analyst Doug Anmuth wrote in a client note published Sunday that “Netflix [is] playing offense, while stock remains defensive.” And Oppenheimer analyst Jason Helfstein called the company “the cleanest story in internet” following its first quarter results.