Earnings lookahead – Netflix, Meta & Tesla

Netflix (NFLX.O) – reports Tuesday after the close

Netflix heads into its Q3 report with the stock down roughly 25% this year and a company that has just cut about 6% of its workforce – around 1000 jobs, its biggest round of layoffs since 2022 – while also replacing its longtime content chief, with former Disney executive Peter Rice taking over from Bela Bajaria. It is a lot of change for a business that, until fairly recently, was supposed to have it all worked out. Analysts expect revenue of about $12.87bn, up around 11.8% YoY, which would still be Netflix’s slowest Q3 growth in three years, with EPS forecast at roughly $0.82. For the full year, consensus sits at about $51.2bn in revenue and EPS of around $3.58, leaving the stock on a forward P/E of about 18.8x – well below its five-year average of 31x, and a reminder of how quickly the market can fall out of love with a former darling.

On the positive side, Netflix is pushing into live sports, having recently acquired the 2030 FIFA World Cup broadcast rights in Spain, and its ad business is expected to grow. On the negative side, US user churn rose 16.6% YoY last quarter, and Jefferies estimates average monthly viewing time per member has fallen to 49 hours from 66 hours since 2023, partly due to competition from YouTube and the FIFA World Cup – which makes buying a slice of the next tournament either very shrewd or faintly ironic. Investors will likely be looking for signs that Netflix can reignite engagement, and that the restructuring marks a sharpening of focus with its ambition intact.

A miserable two years for Netflix has been made only slightly better by a small recovery in early October. The stock held the July lows by a whisker, and if it does show signs of life then it needs to clear last week’s high at $73 and then the February low at $75 to be in with a chance of more substantial gains.

Meta Platforms (META.O) – reports Wednesday after the close

Meta is the steadiest performer of this trio, with the stock up roughly 7.5% year to date and closing at around $709. Analysts expect Q3 revenue of about $63.3bn as advertising continues to do the heavy lifting, with EPS consensus around $5.89 – though estimates range from $2.61 to $7.57, an unusually wide spread that reflects how little anyone seems sure of when it comes to how much AI spending will eat into profits. For the full year, the Street expects roughly $254bn in revenue and EPS of about $30.72, putting the stock on a forward P/E of about 21.4x. Last quarter was a mixed bag, with revenue beating expectations by about 1% but EPS of $6.18 missing by roughly 14%, largely thanks to heavy AI investment.

Meta continues to push AI hard, having recently released the open-weight Muse Spark model, with 816 billion parameters, and partnered with Apple to run it on Mac computers. Regulatory headwinds, meanwhile, are mounting: Meta is challenging the UK’s Ofcom over how fines are calculated, faces scrutiny in Brazil’s election over alleged platform bias and US courts are allowing Florida to enforce its children’s social media law. Reporting on the same day as Tesla, Meta gives investors a neat side-by-side comparison of two very different approaches to massive capital spending – Meta on AI infrastructure, Tesla on vehicles and energy – and how each is translating into returns. In the end, investors want evidence that Meta’s enormous AI bill will turn into revenue growth fast enough to keep them patient.

Meta’s stock chart is the very definition of ‘digestion’. It is back at levels first hit almost two years ago, another sign of how market leadership has moved beyond the ‘Magnificent 7’.

Having dropped below the January high, the April and July highs at $690 are the next potential support. Admittedly the shares went on a tear in September, so a bit more consolidation might be the most likely outcome here.

Tesla (TSLA.O) – reports Wednesday after the close

Tesla reports in the middle of a typically busy news cycle, with the stock at about $354.72 and down roughly 21% this year. Analysts expect Q3 revenue of about $27.9bn and EPS of roughly $0.43, down from $0.50 a year ago, though an EPS range of $0.05 to $0.70 suggests the analyst community is about as united on Tesla as it ever is. The company delivered 486,532 vehicles in Q3, beating estimates, but margins remain under pressure, while a forward P/E of about 166x and EV/EBITDA of roughly 122x put the valuation in territory no traditional carmaker could hope to reach.

The excitement this week centres on the newly unveiled Roadster, complete with SpaceX rocket thrusters, and growing talk of a Tesla-SpaceX merger, with Barclays suggesting a deal could be announced before Tesla’s 3 December annual meeting. FSD has also been approved in Slovakia. Less exciting, though probably more important, Q2 free cash flow was negative $1.1bn, energy division chief Mike Snyder has departed and capital spending is set to exceed $25bn this year, which is likely to strain cash. Investors may well enjoy the rocket thrusters, but the margin and cash flow numbers are likely to carry far more weight than anything on show at the reveal.

Tesla’s summer rally ran out of juice in late September, but it has avoided dropping through September’s lows. The late 2025 record highs seem quite far away, and despite the new flying car it is far from clear there is much of a catalyst for further gains here.