Netflix NFLX is leaning further into live sports as a potential growth lever, and recent company disclosures suggest the strategy is gaining traction while still carrying near-term cost weight.
In its first-quarter 2026 results, Netflix reported revenue growth of 16% year over year (+14% on an FX-neutral basis) and operating income of $4 billion, up 18%, with an operating margin of 32.3% versus 31.7% in first-quarter 2025. The company aired more than 70 live events in the quarter, including its first regional live event — the World Baseball Classic — which delivered 31.4 million viewers in Japan and became the most-watched program ever on Netflix in that country, helping make Japan the largest contributor to member growth in the first quarter. On theearnings call management noted the WBC drove the largest single sign-up day ever in Japan, and Japan’s highest quarterly paid net adds in company history.
The sports pipeline for the second half of 2026 is substantial. Netflix expanded its NFL coverage with a five-game slate beginning Week 1 with the league’s first regular-season game in Australia on Sept. 10, a first-ever Thanksgiving Eve matchup on Nov. 25, and Christmas Day games. The Quarterback docuseries returns July 14, and the recent MVP MMA Rousey vs. Carano event peaked at nearly 17 million global viewers, averaging 12.4 million across the triple main event.
The trade-off is timing. Netflix guided second-quarter operating margin lower, to 32.6% from 34.1% a year earlier, with content spending weighted toward the first half and the highest year-over-year content amortization growth rate of 2026 expected in the second quarter before easing. Full-year guidance was maintained at $50.7-$51.7 billion in revenues and a 31.5% operating margin. Management has framed its sports approach around big breakthrough events rather than regular-season packages, judging returns on both viewing and advertising. We believe that sustained engagement can likely convert into durable revenues in the near term.
Peers Expand Their Own Live Sports Bets
Rivals are pursuing comparable strategies. Amazon AMZN has anchored Amazon Prime Video around live sports, holding exclusive streaming rights to Thursday Night Football, while its NBA coverage under the league’s new media deal includes Friday-night games and the entire NBA Cup knockout round. Amazon Prime Video also secured a multiyear agreement to exclusively present three Duke men’s basketball games per season beginning in 2026. Disney DIS, meanwhile, integrated ESPN into Disney+: ESPN Unlimited plans give Disney+ subscribers access to live events from the NFL, NBA, college football, golf, soccer and postseason coverage. Both Amazon and Disney+ position live sports as engagement and subscription drivers, mirroring the dynamic shaping Netflix’s approach.
NFLX’s Price Performance, Valuation & Estimates
Shares of Netflix have lost 5.5% in the year-to-date period, outperforming both the Zacks Broadcast Radio and Television industry’s and the broader Consumer Discretionary sector’s decline of 6% and 8.8%, respectively.
NFLX’s Price Performance
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From a valuation standpoint, Netflix appears overvalued, trading at a forward 12-month price-to-sales ratio of 6.93X, higher than the industry’s 4.04X. NFLX carries a Value Score of D.
NFLX’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $3.60 per share, up 2% over the past 30 days. This indicates a 42.29% increase from the previous year.
Netflix, Inc. Price and Consensus
Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote
NFLX currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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