3 Reasons to Hold Netflix Stock in 2H25 Beyond its 38% YTD Growth
Netflix Inc. NFLX has delivered impressive returns for shareholders in 2025, with the streaming giant's shares surging approximately 38.2% year to date, significantly outpacing other streaming competitors like Apple AAPL, Amazon AMZN, and Disney DIS, as well as the broader Zacks Consumer Discretionary sector and the S&P 500. Shares of Apple and Amazon have lost 19.7% and 4.4% while Disney has returned 5.6%, respectively, in the same time frame.
While such substantial gains might prompt some investors to consider taking profits, recent developments suggest compelling reasons for current shareholders to maintain their positions through the second half of 2025. However, prospective investors may benefit from waiting for more attractive entry points given the current valuation levels.
NFLX Outperforms Sector, Competition
Robust Content Pipeline and Gaming Evolution Aid Prospects
Netflix's content strategy continues to demonstrate remarkable strength with an ambitious slate of programming scheduled for the rest of 2025 and beyond. The highly anticipated final season of Squid Game, the platform's most popular series ever, debuts on June 27, promising to drive significant subscriber engagement and potential new sign-ups during a typically slower summer period.
The company's live programming strategy is gaining traction with the Taylor vs. Serrano boxing rematch scheduled for July 11, building on the success of their previous fight, which became the most-watched professional women's sports event in U.S. history. Netflix has also secured a second NFL Christmas Day game for 2025, expanding its sports programming footprint and attracting premium advertising dollars.
Beyond marquee events, Netflix's global content production continues to strengthen local market penetration. The company's $1 billion investment commitment in Spain between 2025 and 2028, following similar substantial investments in Korea and Mexico, demonstrates its strategy of creating authentic local content that can achieve global appeal.
Netflix's gaming initiative continues to mature, with the company demonstrating significant progress in developing immersive narrative games based on proprietary intellectual property, such as Squid Game: Unleashed, which will receive updates coinciding with the final season release. The gaming portfolio spans mainstream established titles like Grand Theft Auto, family-friendly options, including the upcoming Peppa Pig game, and innovative socially engaging party games that transform traditional living room entertainment.
With consumer gaming spend representing approximately $140 billion globally (excluding China and Russia), Netflix's measured approach to this market demonstrates long-term strategic thinking while maintaining focus on core streaming excellence.
Revolutionary Physical Expansion Through Netflix House
The announcement of Netflix House represents a groundbreaking strategic initiative that extends the company's reach beyond digital screens into physical experiential entertainment. The first two locations, spanning over 100,000 square feet each, will open in Philadelphia's King of Prussia Mall and Dallas's Galleria Dallas in late 2025, with a third location planned for the Las Vegas Strip in 2027.
These immersive entertainment destinations will feature experiences based on popular Netflix properties, including Wednesday, Squid Game, ONE PIECE, and Stranger Things. The facilities will combine interactive experiences, dining through Netflix Bites restaurants, retail opportunities, and themed mini-golf courses. This physical expansion strategy builds upon the success of more than 40 previous live experiences and represents Netflix's evolution from a pure streaming service to a comprehensive entertainment ecosystem.
By allowing fans to literally step inside their favorite Netflix worlds, the company is fostering deeper brand loyalty and creating marketing buzz that could drive subscriber acquisition and retention while establishing a new revenue category.
Strong Guidance Supports Optimistic Outlook
Netflix's forward guidance demonstrates continued momentum across all business segments. For the second quarter of 2025, the company forecasts revenue growth of 15.4% to $11.035 billion, driven by full-quarter benefits from recent price adjustments, continued membership growth, and expanding advertising revenues.
Netflix's ad-supported subscription tier has witnessed strong adoption, with more than 55% of new subscribers in markets where available choosing the ad-supported option, demonstrating strong consumer acceptance of this lower-priced alternative. Management projects advertising revenues will double in 2025 and reach $9 billion annually by 2030, representing a substantial new revenue stream that enhances Netflix's monetization capabilities.
Management's ambitious long-term vision includes doubling revenues by 2030 and achieving a $1 trillion market capitalization. This growth strategy encompasses expanding content libraries, developing live programming options, enhancing gaming capabilities, and building advertising business scale. With full-year 2025 revenue guidance of $43.5 to $44.5 billion and free cash flow expectations of $8 billion, Netflix appears well-positioned to execute on these strategic initiatives.
The Zacks Consensus Estimate for NFLX's 2025 revenues is pegged at $44.47 billion, indicating 14.01% year-over-year growth. The consensus mark for earnings is pegged at $25.32 per share, indicating a 27.69% increase from the previous year.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Investment Considerations for the Second Half of 2025
While these fundamental strengths support holding Netflix stock through the second half of 2025, the significant year-to-date appreciation suggests caution for new investors. Netflix trades at a premium with a forward 12-month P/S ratio of 11.17 compared to the broader Zacks Broadcast Radio and Television industry's forward earnings multiple of 4.12. The current valuation levels may have largely priced in near-term positive developments, particularly given the strong Q1 performance and positive full-year guidance.
NFLX's P/S F12M Ratio Depicts Premium Valuation
Current shareholders benefit from Netflix's diversified growth strategy spanning traditional streaming, advertising, live events, and now physical experiences. The company's proven ability to adapt and innovate in the rapidly evolving entertainment landscape, combined with strong financial metrics and shareholder-friendly policies, justifies maintaining positions despite the recent rally.
For prospective investors, patience may prove rewarding. Market volatility or temporary execution challenges could provide more attractive entry points later in 2025, allowing new investors to participate in Netflix's long-term growth story at more reasonable valuations while benefiting from the company's expanding entertainment ecosystem and robust content pipeline. NFLX currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners Up
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Apple Inc. (AAPL): Free Stock Analysis Report
Netflix, Inc. (NFLX): Free Stock Analysis Report
The Walt Disney Company (DIS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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