3 Reasons to Load Up on Netflix Stock Before July 16
Key Points
Netflix's advertising business has become a major growth engine, making management's commentary on ad revenue and advertiser demand especially important.
Live sports could boost Netflix ad revenue by attracting premium advertisers and creating stronger pricing power than traditional streaming content.
Margin expansion in the second half could surprise investors if content spending moderates while revenue growth remains strong after Q2.
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Earnings season brings out a lot of noise. Most of it is guesswork dressed up as analysis. But when Netflix (NASDAQ: NFLX) reports results for the second quarter of 2026 on July 16, there are three specific things I think could tell investors whether the next chapter of this company's growth story is actually playing out or just being promised.
The advertising business is no longer a side project
When Netflix first launched its ad-supported tier, the skeptics were loud. Ads felt off-brand for a company built on the idea of uninterrupted streaming. That conversation is over now.
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Netflix's ad-supported tier reached 250 million global monthly active viewers as of its Upfront presentation in 2026, up from 190 million in late 2025. The company is on track to double its advertising revenue to $3 billion in 2026, after already doubling it to $1.5 billion in 2025. More than 80% of ad-tier members watch weekly, which is the kind of engagement stat that keeps advertisers coming back.
What I'll be watching on July 16 isn't the headline revenue number, but rather whether Netflix gives any updated signal on its path to $9 billion in ad revenue by 2030. That figure is the one that reframes how the market should think about this company's long-term earnings power. If management tightens that guidance or adds color on advertiser retention, this stock could move.
Image source: Getty Images.
Live sports is giving the ad business real leverage
Netflix's live sports push isn't just about subscriber acquisition anymore. It's also an advertising play. The company is testing dynamic ad insertion technology with WWE programming and plans to roll it out across its NFL Christmas Day games. It also expanded NFL coverage in 2026 with an international regular-season game and added the Westminster Dog Show to its live events lineup.
Live programming changes the economics of streaming advertising because it's the one format where viewers don't skip and advertisers will pay a premium for it. Walt Disney and Comcast have known this for years through ESPN and NBC Sports. Netflix is now in that conversation in a way it wasn't 18 months ago. The Q2 report will be the first time investors can start to see whether live content is moving the needle on ad pricing.
The margin setup heading into the second half is underappreciated
Netflix entered 2026 warning investors that content spending would be front-loaded into the first half of the year. The company reported a 32.3% operating margin in Q1 -- solid, but management guided for 32.6% in Q2. The full-year operating margin target is 31.5%.
Here's the math that I think matters: If content spend is weighted toward the first half and the company hits or exceeds its first-half margin targets, the back half of the year should show margin expansion. Netflix generated $12.25 billion in revenue in Q1, up 16% year over year. If that rate holds through Q2 while costs flatten in the second half, the operating leverage could be more visible than the current stock price reflects.
Netflix no longer reports quarterly membership numbers, which makes it harder to independently verify growth claims. And a business growing this fast attracts competitive pressure -- Amazon, Apple, and others are not sitting still. If ad revenue growth disappoints or management's second-half cost narrative doesn't hold, July 16 could go the other way.
The three catalysts above are real. But earnings are always a two-sided event, and Netflix has trained investors to expect a lot. What makes Netflix different to me this time around is that most of the streaming investments aren't just about the scale of content, but rather whether the company can keep finding new revenue layers inside a business most people thought was already mature. I think Netflix has that piece. That's a rare thing, and July 16 is a chance to see how much further it can go.
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Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Netflix, and Walt Disney. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.
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