Netflix is charging ahead as one of the stock market's favorite recession plays

• Netflix crushed first-quarter earnings on Thursday.
• Company leadership seemed entirely unconcerned about the economy, even amid Trump's trade war.
• It was the latest sign to investors that Netflix stock is built to weather an economic downturn.

On Netflix's first-quarter earnings call on Thursday, it was what co-CEO Greg Peters didn't say that carried weight.

He didn't complain about a deteriorating economy, or the ongoing trade war's role in causing that. He didn't set the table for future tariff-driven price hikes, or lament high inflation.

Instead, Peters dispatched with the economy talk near the beginning of the call, in an attempt to preempt any questions planned by analysts.

"We've gotten a bunch of questions," he said. " We're paying close attention, clearly, to the consumer sentiment and where the broader economy is moving. But based on what we are seeing by actually operating the business right now, there's nothing really significant to note."

The word "economy" wasn't uttered another time on the call. It was straight down to Netflix's core business.

The confidence conveyed sent the message to investors that Netflix is well-positioned to withstand macro turmoil. It's a perception that's helped shares soar 9% year-to-date and dominate the broader market, as well as the high-flying Magnificent 7 cohort. The stock rose another 3% in after-hours trading.

The earnings report and subsequent dismissal of economic fears reaffirmed this outperformance, and reminded everyone that Netflix is trading like a "recession-resistant" stock.

Why Netflix is recession-resistant

The idea is that if consumers start going out less because of economic uncertainty, they'll stay home and consume relatively cheap entertainment like Netflix. For context, a one-month subscription to the streaming service costs less than most movie ticket prices.

Peters mentioned to analysts that the company has seen this play out over time.

"We certainly seen periods of challenging economic conditions historically in different countries, and we've generally been able to keep that positive flywheel spinning even in those situations and I think that speaks to the gap between value and price that -- and that we are for many people, a very good value even as they're being careful about where they spend," the co-CEO said.

The company is also uniquely insulated from an advertising perspective.

Advertising spend can decline substantially during an economic downturn. But because Netflix's ad business is so small, having launched the division about two years ago, an economic-fueled downturn in advertising spend would have little impact on the company's financials.

"We remain confident in Netflix's outlook given its limited advertising exposure and better protection in a potential worsening economic backdrop to many of its peers," analysts at MoffettNathanson said in a note on Thursday.

The firm expects Netflix to grow its advertising revenue to nearly $6 billion in 2027 and about $10 billion by 2030. The company generated about $2 billion in ad revenue in 2024.

A blockbuster quarter

Here were the key numbers from first-quarter earnings:

• Revenue: $10.54 billion (+12.5% yoy), beat estimate of $10.14 billion
• Earnings per share: $6.61, beat estimate of $5.66
• Operating margin: 32%, compared to 28% in year-ago quarter
• Q2 revenue outlook: Expects growth of 15%, or 17% excluding currency impact