As transatlantic trade tensions escalate, Netflix may be caught in the economic crossfire. With former U.S. President Donald Trump’s “Liberation Day” rhetoric fueling concerns over renewed trade conflicts, Wall Street analysts are now eyeing Europe’s potential retaliatory tariffs—specifically those aimed at digital services.
For Netflix, which leads the SVOD market across Europe, such policy shifts could pose both financial challenges and growth headwinds. But analysts like Laurent Yoon of Bernstein remain optimistic—holding a Netflix stock forecast of $1,200 per share despite looming uncertainty.
Netflix and the Digital Services Tax Landscape
Since 2019, Netflix has been subject to the Digital Services Tax (DST) in major European markets including France, the U.K., and Spain. However, recent geopolitical friction has raised the possibility of broader retaliatory tariffs targeting U.S. tech and streaming giants.
Yoon’s latest report outlines a growing list of investor concerns:
- The risk of European regulatory retaliation
- Subscriber churn post-NFL deal
- Waning engagement in mature markets
Still, he maintains an “outperform” rating, citing strategic resilience and local market integration.
Why Netflix May Withstand European Tariff Pressures
According to Yoon, Netflix’s European strategy offers three major buffers against worst-case outcomes:
- Strong Local Investment
Netflix has spent billions on local content production and employs thousands in the region—boosting cultural goodwill. - Policy Alignment
The company complies with regional content quotas and reinvestment mandates, positioning itself as a partner rather than outsider. - Consumer Fallout
New tariffs would likely raise subscription prices, creating political risk for European governments, as consumers—not just platforms—would bear the cost.
Still, as Yoon warns:
“Would this matter if Europe imposed sweeping retaliatory tariffs? Probably not.”
Tariff Risks and Revenue Growth: The Real Cost to Netflix
Yoon’s models suggest that if Netflix faces new tariffs, it could have to raise prices, resulting in higher churn and flatlining ARM (average revenue per member).
Under his current forecast:
- EMEA subscriber growth: From 101M (2024) to 120M (2026), ~9% CAGR
- But with stagnant ARM, revenue could decline 2.7%, slashing 10% off EPS projections
This illustrates how policy risks could hit Netflix’s financial performance, even as subscriber numbers grow.
Netflix’s European Market Dominance Remains a Key Advantage
Even in a tightening regulatory environment, Netflix continues to dominate European SVOD, consistently outperforming Amazon Prime Video and Disney+ across key territories.
Yoon underscores this market position as a “protective moat”, suggesting that Netflix’s entrenched presence and localized offerings will help absorb shocks better than less-established rivals.
Investor Outlook Ahead of April Earnings
With Netflix set to kick off Hollywood earnings season on April 17, investor focus will shift to executive commentary on trade policy and pricing strategy. Share prices have seen volatility due to engagement concerns and saturation fears, but many analysts, including Yoon, see this as short-term noise.
Netflix’s localized strategy and compliance with European regulations might even give the company negotiating leverage in a hostile trade environment.
Looking Ahead: Strategy vs. Shock
As of now, no European government has enacted specific tariffs targeting U.S. streamers. But with rising protectionist rhetoric and tech sector scrutiny, the risk is real.
If tariffs do arrive, Netflix may need to adapt quickly:
- Absorbing costs to avoid churn
- Adjusting its content investment model
- Rethinking price tier structures
But Yoon and others still believe the company’s first-mover advantage, massive content library, and consumer loyalty will help it navigate any policy headwinds.
Netflix May Feel the Pressure, But Isn’t Panicking
While the possibility of Europe-imposed tariffs raises legitimate concerns for Netflix’s financial outlook, the platform’s regional integration and content leadership provide critical insulation.
Whether the Netflix stock forecast holds at $1,200 will depend on the trajectory of global trade policy—but for now, investors remain cautiously optimistic about its ability to lead in the evolving streaming economy.
