Netflix aims for trillion-dollar company status as its economic impact goes ‘overlooked,' says co-CEO
Becoming a trillion-dollar company is 'a long-term ambition,' Ted Sarandos, co-CEO of Netflix told the audience during a fireside chat at Semafor's World Economy Summit in Washington, D.C., on Wednesday. Netflix's streaming services account for about 10% of total TV watching, and the company has 'enormous room to grow,' he said. 'In the previous five years, we doubled our revenue, we grew profits 10 times, and we grew our market cap three times,' he added.
There's a path to a $1 trillion market cap, Sarandos said. 'But it all is dependent upon executing well,' he said. Sarandos noted that creating in-person experiences for Netflix's most popular shows, like the 'Squid Game Experience' or creating consumer products based on shows, are additional revenue streams. The trillion-dollar club currently includes members such as several Big Tech companies and Berkshire Hathaway, the first non-tech company in the U.S. to reach a $1 trillion market cap.
Netflix, which Sarandos referred to as a tech and entertainment company, is moving full-speed ahead despite economic uncertainty that is pressuring consumer discretionary spending. The company released its first-quarter earnings results on April 17. For the quarter, Netflix beat analyst expectations on both revenue and profit. Revenue totaled $10.54 billion compared with estimates of $10.51 billion, while earnings per share of $6.61 surpassed analyst estimates of $5.71.
"We prioritize profitable growth by reinvesting in the business," Netflix CFO Spence Neumann said during the earnings call. "We maintain ample liquidity. Those are key for us, our top two priorities." On the call, executives pushed the idea that the company's wide range of subscription plans—including one with ads for $8 monthly—provides customers with flexibility if they want to save money, Fortune reported.
During the discussion on Wednesday, Sarandos estimated that Netflix's impact on the U.S. economy from 2020 to 2024 included $125 billion in contributions. In addition, 140,000 production jobs, and 500 productions across all 50 states, he said.
However, the entertainment industry 'certainly is overlooked' when it comes to U.S. trade deals, Sarandos said. 'We get kind of thrown under the bus on trade deals occasionally,' he said. 'You hardly ever see a sitting president photographed on a studio lot.'
'We announced a billion-dollar investment in production in Mexico with president [Claudia Sheinbaum] at her morning press conference,' Sarandos explained. 'I was thinking if we were building a plant to build a billion dollars worth of cars there, the [U.S.] president would certainly announce that.'
Although the entertainment industry isn't currently in the spotlight as much as manufacturing, Netflix resonates with popular culture. The audience at the event was certainly familiar with the company's breakaway hit miniseries "Adolescence."
'It's a remarkable feat in technical storytelling,' Sarandos said of the show.
Sheryl Estradasheryl.estrada@fortune.com
This story was originally featured on Fortune.com
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