Netflix $NFLX -4.60% added more money, more members, and more ambition last quarter. It showed off its scale and asked for patience. But investors aren’t buying it.

Tuesday after the bell, the company mostly (and modestly) beat fourth-quarter 2025 expectations, hit 325 million paid memberships, and laid out an aggressive 2026 plan — including sharply higher margins — but the stock fell close to 5% after hours, underscoring how tightly the company’s future is tied to ad growth and a looming Warner Bros. Discovery deal. The numbers are clean. The narrative isn’t.

Because while Netflix’s latest earnings report delivered the usual markers of success — growth, profit, scale — the subtext was about what happens when a streaming giant starts behaving less like a disruptor and more like a consolidator with a side business to build. While Netflix’s long-term margin story strengthened, near-term costs get heavier first — including higher content amortization and deal-related expenses that are front-loaded into early 2026. So the destination may be attractive, but the path to get there looks bumpy.

Revenue came in at $12.1 billion, up 17.6% year over year, and a one-cent beat of $0.56 per share; net income came in at $2.42 billion, and operating margin was 24.5% for the quarter. Netflix also reaffirmed its longer-range posture, guiding to $50.7 billion–$51.7 billion in 2026 revenue and a 31.5% operating margin, even after acquisition-related costs. On paper, that’s the profile of a company that believes it has matured into a durable cash machine.

Netflix’s near-term outlook landed softer than the market wanted. The company’s Q1 2026 guidance for both revenue and EPS came in below the Street’s expectations — a small miss, but a meaningful one in a stock that’s priced for confidence. Even the long-range guidance carried a bit of a buzzkill: The low end of Netflix’s 2026 revenue range sits below the consensus estimate some analysts were using as their baseline. That turns “ambitious” into “fine” and “fine” into a stock that gets treated like it has to prove itself again.

But markets aren’t just grading this quarter in isolation. Investors are weighing whether Netflix’s next chapter — ads, scale, and a potentially balance-sheet-stretching acquisition — adds up to a story that deserves fresh multiple expansion right now. Investors' response, at least in the first 20 minutes of after-hours trading, was a polite but unmistakable “not yet.”

“Looking ahead to 2026, we’re focused on improving the core business,” said co-CEO Ted Sarandos, “and we do that by increasing the variety and quality of our series and films. We do that by enhancing the product experience and by growing and strengthening our ad business.”

Netflix is no longer selling one clean narrative. It’s selling three: that of a subscription giant trying to keep growing, that of an advertising business trying to scale, and that of a consolidator trying to do a very large deal without breaking the very profitable thing it already built.