Netflix posts record quarter, as Trump talks tariffs and China

• Netflix beats expectations and reports stellar growth and forecasts for 2025.
• China could see 10% tariffs on goods going to the US from next month, which is lower than expected.
• UK public borrowing figures for Dec likely to weigh on bond market, and put pressure on UK to cut public spending quickly and rapidly.

There has been a positive tone to risk this week, as the market digests Trump 2.0. However, Trump is not the only show in town. Earnings reports are also a key driver of stock indices, and the news is good. Netflix reported earnings for the fourth quarter late on Tuesday and the numbers were big. It reported a record number of subscribers, with 18.9mn people joining the service last quarter. This is double what Wall Street analysts had expected and is higher than subscriber growth at the peak of the pandemic.

Netflix remains king of the streamers

 Netflix now has 300mn subscribers worldwide. Unsurprisingly, it also reported strong revenue data. It grew 16% to $10.2bn for Q4, and it expects strong revenue growth for 2025. 2025 revenue forecasts also beat expectations, the company said that annual revenue growth would be up by 14% YoY , at $44.5bn, with operating margin of 29%. These numbers were buoyed by news that Netflix will increase subscription prices in some of its regions this year, including the US and Canada.  

The company noted the success of its live sports broadcasts, which were new for 2025, along with Squid Game 2, which is set to become its most popular show ever. However, the company also said that there was no one show that boosted subscriber figures.

Netflix’s final subscriber numbers go out with a bang

From 2025, Netflix will stop recording subscriber figures, and instead will focus on traditional corporate metrics like revenue, sales growth and profits. Thus, it went out with a bang. One could also argue that stellar subscriber figures such as these would be hard to beat, but there can be no doubt that ditching subscriber growth numbers is a loss for investors as they tell a useful story about Netflix, and its position in the streaming market. However, as the Q4 results show, Netflix remains well ahead of their competitors in the streaming market. Eventually this may shift, however, we will have to watch out for trends in subscriber growth via revenue figures from now on, which is less clear cut, but has been a well flagged policy from Netflix.

Why it’s hard to lose faith in tech

Netflix is seen as a litmus test for the entire tech sector, and based on Netflix’s results, the tech sector could be well placed to report strong earnings figures in the coming months. This is significant for markets. So far in 2025, the equal weighted S&P 500 index has outperformed the market cap weighted index, which is heavily influenced by tech. The resurgence in value stocks has been seen as part of the Trump trade, however, tech is unlikely to fade away anytime soon. A mixture of politics, tech bosses are rushing to get close to Trump, the new President’s $500bn investment in AI computing infrastructure in Texas, and a solid earnings season could see the US mega cap tech sector continue to dominate markets in the medium term.

Netflix’s share price rose more than 2% on Tuesday and Nvidia was also higher by 2%, and there could be further gains today, as the market focuses on Trump’s commitment to AI.

Trump and tariff talk: more bark than bite, although China and EU gearing up more taxes on US exports

Mention of China may have been absent from Trump’s first day in office; however, he warned on Tuesday that he could impose a 10% tariff on all Chinese imports as soon as next month. He has once again tied tariffs threats to China’s sending fentanyl, the highly addictive opioid, to Canada that makes its way back into America. He also threatened further tariffs on Canada and the EU, which he said was ‘very, very, bad for the US’. The US has a $350bn deficit with the EU, which is igniting the ire of President Trump. European stocks are expected to open lower on Wednesday on the back of this news.

Chinese stocks are lower, the Hang Seng is down 1.8% and the CSI 300 is also lower by 0.9%, as the market digests news about tariffs. However, the decline could be limited, as a 10% tariff on all Chinese imports to the US Is significantly lower than the 60% rate, he was threatening after his election. The EU may also be hopeful that they could see a ‘tariff light’ approach from the US. Thus, the decline in stocks could be limited, as investors assess that Trump’s bark is worse than his bite when it comes to tariffs.

UK’s public sector borrowing surges, as bond market could bite Rachel Reeves once again

There was more bad news for the UK’s public finances. Borrowing rose sharply in December to $17.8bn from $11.8bn in November. The bond market will tell us if it tolerates this level of borrowing from the UK government when it opens later this morning. After last week’s sell off in UK bonds, these figures could reignite fears about the sustainability of the UK public sector’s spending habits. The increase in public sector net cash requirement last month is also likely to upset the bond market, although it was expected. The weak growth figures and higher borrowing costs are a toxic mix for bond markets right now. The pound has dropped sharply on this data, and GBP/USD is down 30 points, at $1.2320. Since the pound and UK bond yields have an inverse correlation, this may suggest that bond yields will rise later today.

Overall, the bond market is already wary about UK government spending, and today’s figures show they are right to be. These figures once again heap pressure on Rachel Reeves to cut public spending rapidly, possibly in March. The market has already sent her a warning sign earlier this month, so any bond market sell off could be mild, however, we expect some of the recent recovery in the bond market to be unwound on the back of this data. She may also need to communicate more forcefully her commitment to cutting spending, even the sacred cows, to get the bond market back on side, and the numbers down, in the long run.