Netflix's Trillion-Dollar Dream: Should Investors Buy the Stock Now?
Netflix NFLX has set its sights on an ambitious target that has caught the attention of investors worldwide: doubling its revenues by 2030 and achieving a $1 trillion market capitalization. This bold declaration comes on the heels of the streaming giant's impressive first-quarter 2025 performance, which saw the company beat earnings expectations with $6.61 per share, exceeding the Zacks Consensus Estimate by 16.17% and jumping 54.8% year over year. (Read More: Netflix Q1 Earnings Beat, Revenues Rise Y/Y on Subscriber Gain).
The company has consistently outperformed market indices, with a 39.1% six-month return, 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, Disney and Amazon have lost 11.6%, 8.1% and 3.8%, respectively, in the same time frame.
NFLX Outperforms Sector, Competition
The Growth Strategy Behind the Trillion-Dollar Vision
Netflix's path to a trillion-dollar valuation isn't just wishful thinking — it's backed by a comprehensive growth strategy focused on four key areas. The company plans to expand its already robust content library, further develop its increasingly successful live programming options, enhance its gaming division, and build out its rapidly growing advertising business.
NFLX's content diversity spans genres, languages, and formats, creating multiple growth engines for the company. In the second quarter, new films include Nonnas starring Vince Vaughn, Tyler Perry's new drama Straw starring Taraji P. Henson, Bullet Train Explosion (Japan) and Havoc, an action thriller starring Tom Hardy and Forest Whitaker. New series include Forever, a modern-day take on the classic Judy Blume novel; romantic comedy The Royals (India); The Four Seasons, a comedy starring Tina Fey, Steve Carell and Colman Domingo; El Eternauta (Argentina); and Ransom Canyon, a romantic western. America's Sweethearts: The Dallas Cowboys Cheerleaders, Black Mirror and Ginny & Georgia are all back for brand new seasons. Netflix has also slated the series finales of the Emmy Award-winning adult animated series Big Mouth and fan-favorite YOU.
Furthermore, Netflix's live programming strategy has already delivered notable successes, including the Paul-Tyson fight, which became the most-streamed sporting event ever. The company also recently secured the U.S. rights for FIFA's Women's World Cup in 2027 and 2031, demonstrating its commitment to strategic live content acquisition rather than pursuing expensive regular-season sports packages.
Ad-Supported Tier: The Hidden Growth Accelerator
Perhaps the most promising aspect of Netflix's growth strategy is its advertising business. According to company data, more than 55% of new subscribers in markets where it's available are choosing the ad-supported option. Management projects advertising revenues reaching $9 billion annually by 2030, representing a significant new revenue stream.
The company recently launched its Ad Suite in the United States on April 1, with international expansion beginning this quarter. Management expects advertising revenues to double in 2025 alone, signaling confidence in this relatively new business segment. This diversification of revenue streams adds stability to Netflix's growth trajectory and reduces its reliance solely on subscription growth.
Financial Health Supports Long-Term Ambition
Netflix's financial position remains robust, with first-quarter 2025 revenues reaching $10.54 billion, up 12.5% year over year. The operating margin expanded impressively to 31.7%, up 370 basis points year over year. Free cash flow for the quarter was pinned at $2.66 billion compared with $1.37 billion in the previous quarter.
For the second quarter of 2025, Netflix forecasts revenues to increase 15.4% to $11.035 billion and projects an operating margin of 33%, representing a ~6 percentage point year-over-year improvement. The company maintains its full-year 2025 revenue guidance of $43.5-$44.5 billion and free cash flow forecast of approximately $8 billion.
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 $25.33 per share, indicating a 27.74% increase from the previous year.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Premium Valuation Justified by Exceptional Performance
While Netflix trades at a premium with a forward 12-month P/S ratio of 9.77 compared to the broader Zacks Broadcast Radio and Television industry's forward earnings multiple of 3.91, this valuation appears justified given the company's unique position at the intersection of technology and entertainment. Netflix's ability to outcompete both traditional media companies and tech giants speaks to its exceptional business model and execution.
NFLX's P/S F12M Ratio Depicts Premium Valuation
Investment Opportunity in 2025
For investors, Netflix presents a compelling opportunity in 2025. NFLX's strong content lineup for 2025, including new seasons of its biggest shows like Squid Game, Wednesday and Stranger Things, positions the company for continued subscriber growth. Combined with its expanding advertising business, innovative gaming initiatives, and strategic live programming acquisitions, Netflix has multiple catalysts to drive growth toward its trillion-dollar ambition.
Investors should consider that Netflix continues to hold a leadership position in engagement (approximately two hours per paid membership per day), revenues ($39 billion), and profit ($10 billion in operating income) in a market that continues to expand. With streaming still representing less than 10% of TV hours globally, Netflix has substantial runway for growth.
For long-term investors seeking exposure to the continuing evolution of global entertainment consumption, Netflix's strategic vision and execution capabilities make it a compelling buy in 2025, despite its premium valuation. NFLX currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
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).
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
an hour ago
- Globe and Mail
Stock Split Watch! Does Netflix Stock or Costco Stock Split First?
Stock splits can be exciting for investors, as they make shares more affordable. *Stock prices used were the afternoon prices of June 9, 2025. The video was published on June 11, 2025. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Should you invest $1,000 in Costco Wholesale right now? Before you buy stock in Costco Wholesale, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Costco Wholesale wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $649,102!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $882,344!* Now, it's worth noting Stock Advisor 's total average return is996% — a market-crushing outperformance compared to174%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Parkev Tatevosian, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Netflix. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.
Winnipeg Free Press
3 hours ago
- Winnipeg Free Press
Montreal Grand Prix fans stuck paying turbocharged prices for accommodation
MONTREAL – Paula Wadden has been a huge Formula One fan ever since she got hooked on the Netflix show 'Drive to Survive' a few years ago. But the Halifax-area health-care worker says watching the Grand Prix in Montreal this weekend comes with high-octane prices. The Montreal hotel where she's spending the first part of the week doubles in price for the weekend. Instead, she'll spend the weekend at a hotel outside the city, near the airport, for about $600 a night. 'The tickets (prices) are OK, it's the accommodation and the means that are getting expensive,' she said Tuesday in Old Montreal. 'I don't know how the average Joe can afford it.' Wadden said the trip, which she's taking with her daughter and her daughter's partner, will cost $6,000 to $7,000. And that's despite the switch in hotels and the decision to save money by driving the 12 hours from Halifax rather than flying. While looking up hotels online, she said she saw even more eye-watering hotel prices ranging between $1,200 to more than $2,000 a night, as well as $4,000-per night Airbnbs. The Grand Prix is Montreal's biggest tourist event, expected to attract some 350,000 visitors and generate $162 million for the city, according to the head of Tourisme Montreal. Yves Lalumière estimates average hotel room prices on Grand Prix weekend at $600 to $800 per night — although some wealthy CEOs will pay $8,000 for a suite. 'This year's prices will probably stabilize quite a bit, maybe a two to three per cent increase over the previous year,' he said in an interview. 'But the last five years I've seen an increase year after year, and a substantial increase as well.' A ticket package for the three race days starts at $360, according to the Canadian Grand Prix website — though well-off fans can pay much more. Packages with perks such as VIP concierge service, reservations at popular restaurants and parties, and access to areas such as pit lanes and paddocks can run in the tens of thousands of dollars. However, Lalumière noted that the city also offers plenty of free entertainment, including a Grand Prix party on Crescent Street. And he said hotel room prices are still 'very competitive,' especially for those paying in U.S. dollars or euros. Crowds, meanwhile, are not only growing but also becoming more diverse, he said. 'I think F1 has done a great job in selling the sport over the media,' Lalumière said. 'And, therefore, now you're attracting a lot more ladies, you're attracting a lot more young people as well to the race.' Black-and-white checkered banners were already fluttering on St-Paul Street in Old Montreal on Tuesday, as tourists lined up to photograph a Formula One car on display outside Max Bitton's racing-themed store, Fanabox. Bitton said he brought in the car as a gift to fans after last year's Grand Prix, which was marred by mishaps on and off the track that left a bad taste in some fans' mouths. Those issues included traffic headaches, flooding from rain, fans turned away from a practice session they were led to believe was cancelled, and restaurants ordered to suddenly close their patios on one of the busiest evenings of the year. 'I'm trying to give back because last year was so tough,' Bitton said. While Grand Prix fans are generally well-off, Bitton also worries about rising prices, especially now that the city has imposed tougher new rules on short-term rentals for primary residences. Next year, the Grand Prix will be held from May 22 to 24, which is outside the June-to-September window in which primary residence rentals are allowed. 'A lot of the fans love to flock here because of the heritage and they love this place,' Bitton said. 'They're willing to pay more but at some point it doesn't make sense.' At Bitton's store, tourists said attending the Grand Prix was costly, but worthwhile. Max Harrison, from Bournemouth in southern England, said he managed to find a spot in a hostel for about $40 a night early in the week. For race weekend, he's spending $200 a night to stay in a room in an Airbnb shared with several others. 'It's a bit much, you can tell they've spiked (the prices),' he said. He believes 'Drive to Survive' has brought new fans to the sport, which means prices will only continue to go up. But for him, it's worth it to check the Montreal Grand Prix off his bucket list. 'The championship this year is looking really close, so it's going to be a really good race,' he said. 'And Canada is a beautiful place and I've always wanted to come.' Denise Beevor and Mark Omerod, from West Sussex in England, say they're spending 'a small fortune' for a 10-day trip that includes Sunday's race as well as stops in Quebec City and Mont-Tremblant. 'I think, particularly since COVID, it's important to have things to look forward to and to take memories away with you, and you can't replace that,' Beevor said. 'Possessions come and go, memories don't.' The CEO of the greater Montreal hotels association said the occupancy this weekend is expected to be around 90 per cent, similar to last year. Dominique Villeneuve said the industry was prepared to meet the demands of Grand Prix weekend 'enthusiastically and with the same professionalism that characterizes our industry.' This report by The Canadian Press was first published June 12, 2025.
Globe and Mail
4 hours ago
- Globe and Mail
World shares are mixed as markets shrug at latest China-US trade deal
TOKYO (AP) — World shares were trading mixed early Thursday after Wall Street's rally stalled, as investors appeared not to react much to the results of the latest round of China-U.S. trade talks. Germany's DAX lost 0.7% to 23,787.77 and the CAC 40 in Paris slipped 0.4% to 7,744.41. Britain's FTSE 100 was nearly unchanged at 8,863.07. The futures for the S&P 500 and the Dow Jones Industrial Average were down 0.3%. In Asian trading, Japan's Nikkei 225 lost 0.5% to 38,216.06. Hong Kong's Hang Seng sank 0.5% to 24,234.80, while the Shanghai Composite index edged 0.1% lower to 3,404.66. In South Korea, the Kospi gained 0.9% to 2,933.44, while Australia's S&P/ASX 200 edged 0.1% higher to 8,604.50. Taiwan's Taiex lost 0.8%. On Wednesday, the S&P 500 fell 0.3% to 6,022.24 for its first loss in four days. The Dow Jones Industrial Average was virtually unchanged at 42,865.77 after edging down by 1 point. The Nasdaq composite slipped 0.5% to 3,400.30. Several Big Tech stocks led the way lower, and a 1.9% drop for Apple was the heaviest weight on the market. It's been listless this week after unveiling several modest upcoming changes to the software that runs its devices. The action was stronger in the bond market, where Treasury yields eased after a report suggested President Donald Trump's tariffs are not pushing inflation much higher, at least not yet. U.S. consumers had to pay prices for food, gasoline and other costs of living that were 2.4% higher overall in May than a year earlier. That was up from April's 2.3% inflation rate, but it wasn't as bad as the 2.5% that Wall Street was expecting. A fear has been that Trump's wide-ranging tariffs could ignite an acceleration in inflation, just when it had seemed to get nearly all the way back to the Federal Reserve's 2% target from more than 9% three summers ago. It hasn't happened, though economists warn it may take months more to feel the full effect of Trump's tariffs. Trump said Wednesday that China will supply rare-earth minerals and magnets to the United States, while his government will allow Chinese students into U.S. universities in a deal that still needs an agreement by him and by China's leader. Trump also said that 'President XI and I are going to work closely together to open up China to American Trade. This would be a great WIN for both countries!!!' Investors are still hoping for a more sweeping trade deal that would ease tensions between the world's two largest economies. Hopes for such deals between the United States and countries around the world have been one of the main reasons the S&P 500 has charged nearly all the way back to its all-time high after dropping roughly 20% below a couple months ago. Without them, the fear is that Trump's high tariffs could drive the economy into a recession while pushing inflation higher. The S&P 500 is now sitting 2% below its record. Tesla swung between gains and losses before finishing with a rise of 0.1% to continue its shaky run. It's been recovering much of its big losses taken last week after Elon Musk's relationship with Trump imploded, which in turn raised fears about a loss of business for the electric-vehicle company. Musk on Wednesday backed away from some of his earlier comments and said they went 'too far.' In the bond market, the yield on the 10-year Treasury eased to 4.41% from 4.47% late Tuesday. Shorter-term yields, which more closely track expectations for what the Federal Reserve will do with overnight interest rates, fell more. Wednesday's better-than-expected reading on inflation raised expectations along Wall Street that the Fed could cut its main interest rate at least twice by the end of the year. In other dealings early Thursday, U.S. benchmark crude oil lost 46 cents to $67.69 per barrel. Brent crude, the international standard, shed 53 cents to $69.24 per barrel. The U.S. dollar slipped to 143.90 Japanese yen from 144.60 yen. The euro rose to $1.1518 from $1.1487.
