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Yahoo
16-07-2025
- Business
- Yahoo
3 Broadcast Radio & TV Stocks to Buy From a Challenging Industry
The Zacks Broadcast Radio and Television industry has been grappling with an escalation in cord-cutting despite a surge in demand for streaming content. However, industry players, such as Netflix NFLX, Roku Inc. ROKU and Bilibili BILI, are reaping the benefits of a massive spike in digital content consumption. These companies are thriving due to their diverse content offerings, which include original, regional, and short-form content tailored for small screens like smartphones and tablets. Improved Internet speed and penetration, coupled with technological advancements, have been advantageous for industry participants. As monetization and revenues from advertising spending continue to be modest, strategies focused on profit protection, cash management and greater technology integration have gained significance and are expected to aid these companies in driving top-line growth in the near term. Industry Description The Zacks Broadcast Radio and Television industry encompasses companies that provide entertainment, sports, news, non-fiction, and musical content across television, radio, and digital media platforms. These entities generate revenues through the sale of television and radio programs, advertising slots and subscriptions. With technological advancements and a growing demand for virtual reality and Internet radio, industry players are increasing their investments in research and development, as well as sales and marketing efforts, to remain competitive. The industry's focus is likely to shift toward sustaining current levels of operations, coupled with a renewed emphasis on flexibility. This approach would accelerate the transition to a variable cost model, thereby reducing fixed costs and enhancing agility in the face of evolving market dynamics. 4 Broadcast Radio and Television Industry Trends to Watch Shift in Consumer Preference a Key Catalyst: To adapt to the evolving landscape, companies are diversifying their content offerings for over-the-top (OTT) services alongside traditional linear TV. The availability of streaming services across a wide range of platforms has enabled them to reach a global audience, expand their international user base and attract advertisers to their platforms, thereby boosting ad revenues. The utilization of services that aid advertisers in measuring their return on investment and enhancing use cases is expected to benefit industry participants. Major leagues and events, such as the NFL, NHL, Olympics, European Games, EPL and elections, also contribute significantly to ad revenue generation. Increased Digital Viewing Fuels Content Demand: Many industry participants, either launching their own OTT services or acquiring existing ones, leverage user insights to deliver tailored content. The surge in digital viewing has made consumer data readily available, allowing companies to apply artificial intelligence (AI) and machine learning techniques to create or procure targeted content. This approach not only boosts user engagement but also enables industry players to raise the prices of their services at opportune moments without the fear of losing subscribers. Uncertain Macroeconomic Landscape Impedes Production and Ad Demand: Advertising is a significant revenue source for the Broadcast Radio and Television industry. However, industry participants are grappling with the effects of persistently high inflation, rising interest rates, increased capital costs, a soaring U.S. dollar and the looming threat of a recession. These factors have prompted advertisers to trim their ad budgets, which is expected to impact the top-line growth of industry players in the near term. Moreover, intense competition for ad dollars from tech and social media companies has been a significant impediment to the growth of industry participants. : The surge in cord-cutting has compelled industry participants to offer "skinny bundles." These Internet-based services often contain fewer channels than traditional subscriptions and are, therefore, more affordable. This move aligns with changing consumer viewing dynamics, as growth in Internet penetration and advancements in mobile, video and wireless technologies have boosted small-screen viewing. While these alternative services are expected to keep users engaged with their platforms, increasing the need for additional content, the low-priced skinny bundles are likely to dampen the top-line performance of industry players. Zacks Industry Rank Indicates Dull Prospects The Zacks Broadcast Radio and Television industry is housed within the broader Zacks Consumer Discretionary sector. It currently carries a Zacks Industry Rank #176, which places it in the bottom 28% of more than 250 Zacks group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dismal near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to industry's position in the bottom 50% of the Zacks-ranked industries results from a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are pessimistic about this group's earnings growth the gloomy industry outlook, a few stocks are worth watching, as these have the potential to outperform the market based on a strong earnings outlook. But before we present such stocks, it is worth first looking at the industry's shareholder returns and current valuation. Industry Beats Sector, S&P 500 The Zacks Broadcast Radio and Television industry has outperformed the broader Zacks Consumer Discretionary sector and the S&P 500 Index in the past industry has returned 70.9% over this period compared with the S&P 500's growth of 12.1% and the broader sector's appreciation of 24.3%. One-Year Price Performance Industry's Current Valuation On the basis of trailing 12-month Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA), which is a commonly used multiple for valuing Broadcast Radio and Television stocks, the industry is currently trading at 19.39X versus the S&P 500's 17.71X and the sector's the past five years, the industry has traded as high as 21.4X and as low as 4.69X, recording a median of 10.36X, as the chart below shows. EV/EBITDA Ratio (TTM) 3 Broadcast Radio and Television Stocks to Buy Bilibili: This Zacks Rank #1 (Strong Buy) company presents compelling investment opportunities, driven by strong operational improvements and strategic positioning. The company's first-quarter 2025 results demonstrated remarkable progress with 24% revenue growth to RMB7 billion, a 99% reduction in GAAP net loss to just RMB11 million, and gross profit margins expanding to 36.3% from 28.3% year over year. Gaming revenues surged 76% while advertising revenues grew 20%, with performance-based ads increasing more than 30%. You can see the complete list of today's Zacks #1 Rank stocks here. The platform's user engagement remains robust with 107 million daily active users spending 108 minutes daily, while monthly paying users reached a record 32 million. Bilibili's dominant position among China's Gen Z demographic, combined with successful cost-cutting initiatives and improving profitability metrics, positions the stock favorably for continued growth as the company approaches its long-term margin Zacks Consensus Estimate for 2025 earnings has increased 24.6% to $0.71 per share in the past 60 days. BILI shares have gained 31.7% year to date. Price and Consensus: BILI Netflix: Based on Netflix's future projections, the streaming giant presents a compelling investment opportunity. This Zacks Rank #2 (Buy) company has set an ambitious target to double its revenues by 2030 and achieve a $1 trillion market capitalization. Netflix's growth strategy includes expanding its content library, developing live programming options, enhancing its gaming division, and building its advertising business. These strategic initiatives are expected to drive significant revenue and profit growth in the coming years. The company is still targeting a 29% operating margin for 2025 based on F/X rates as of Jan. 1, 2025. Netflix demonstrates strong financial discipline alongside ad-supported subscription tier has become a significant success story for Netflix. According to company data, more than 55% of new subscribers in markets where it's available are choosing the ad-supported option. This has led management to project advertising revenues reaching $9 billion annually by 2030, representing an increasing portion of Netflix's total Zacks Consensus Estimate for 2025 earnings has moved north by 0.5% to $25.45 per share in the past 30 days. NFLX shares have returned 41.1% year to date. Price and Consensus: NFLX Roku: This Zacks Rank #2 company has been strengthening its position in the U.S. ad-supported streaming market by focusing on platform innovation. The Roku Channel became the #2 app on its platform by engagement in the United States in the first quarter of 2025, driven by improvements to the AI-powered content row that has been boosting viewer engagement, ad reach and subscriptions. The Home Screen has been reaching more than 125 million people daily, serving as a key launch point for advertisers. Roku's ad partnerships and shoppable formats have been unlocking new monetization avenues. A recent deal with Amazon Ads expanded reach to an estimated 80 million CTV homes. Roku has been investing in new ad products and measurement tools, expected to roll out in the second half of Zacks Consensus Estimate for 2025 earnings has remained steady at a loss of 18 cents per share in the past 60 days. In the year-to-date period, ROKU shares have gained 22.3%. Price and Consensus: ROKU 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 Netflix, Inc. (NFLX) : Free Stock Analysis Report Roku, Inc. (ROKU) : Free Stock Analysis Report Bilibili Inc. Sponsored ADR (BILI) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Yahoo
16-07-2025
- Business
- Yahoo
Netflix Gears Up for Q2 Earnings Release: ETFs in Focus
Netflix NFLX is set to release second-quarter 2025 results on July 17 after market close. It is worth taking a look at the fundamentals of the world's largest video-streaming company ahead of its results. Netflix shares have risen about 29% over the past three months, outperforming the broader industry's growth of 25.1%. The strong trend is expected to continue, given that Netflix has a strong chance to beat earnings a result, ETFs with the largest allocation to this streaming giant, like First Trust Dow Jones Internet Index Fund FDN, FT Vest Dow Jones Internet & Target Income ETF FDND, MicroSectors FANG+ ETN FNGS, Communication Services Select Sector SPDR Fund XLC and Invesco Next Gen Media and Gaming ETF GGME are in focus. Earnings Whispers Netflix has an Earnings ESP of +1.68% and a Zacks Rank #2 (Buy). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter. The online video-streaming giant saw a negative earnings revision of a penny over the past seven days for the to-be-reported quarter. It is expected to report substantial earnings growth of 44.7% and revenue growth of 15.6% for the to-be-reported quarter. The company's earnings surprise history is impressive, as it delivered an earnings surprise of 6.94% on average over the past four quarters. Netflix, Inc. Price, Consensus and EPS Surprise Netflix, Inc. price-consensus-eps-surprise-chart | Netflix, Inc. Quote Analysts Are Bullish Ahead of Earnings Analysts are bullish on Netflix, with an average brokerage recommendation (ABR) of 1.72 made by 45 brokerage firms. Out of them, 27 are Strong Buy and three are Buy. Strong Buy and Buy, respectively, account for 60% and 6.67% of all recommendations. The average price target for Netflix comes to $1,239.18, ranging from a low of $800 to a high of $1,600 (read: Tech ETFs Hit New Highs as NVIDIA Powers Market Rally).Some analysts raised the target price on the stock ahead of the earnings release. BMO Capital lifted the target price to $1,425 from $1,200, reflecting growing confidence in the streaming giant's near and long-term growth prospects. BMO's upward revision was driven by record-breaking viewership for "Squid Game 3," along with favorable foreign exchange trends, which are expected to boost revenue and operating income for the second quarter of 2025 and the second half of the year. The analyst also highlighted emerging artificial intelligence tailwinds that could provide multi-year Sandler also recently raised its price target on Netflix to $1,400, citing upbeat management commentary and higher revenue expectations for the third quarter of 2025. Needham also boosted its target to $1,500, highlighting the company's exceptional labor efficiency, while Wells Fargo upped the price target on the stock to $1,500 from $1, Research Group lifted the price target to $1,600 from $1,350, citing Netflix's dominant position in the subscription streaming video market. What to Watch The company remains unscathed by the ongoing tariff chaos as the entertainment industry shows its resilience in tough economic times. Netflix's low-cost advertising-supported subscriptions and live sports expansion will continue to fuel growth. The streaming giant offered an upbeat outlook for the ongoing quarter on its last earnings call. It expects revenues to grow 15% year over year to $11.04 billion, while earnings per share are expected to rise 44% to $7.03. Valuations Netflix shares look expensive at current levels, with a P/E ratio of 49.65 versus 15.63 for the industry. However, it has a strong Growth Score of B, indicating that it is primed for more growth. This justifies its high valuation. Also, Netflix has become a popular defensive play in the current unsteady market. ETFs in Focus First Trust Dow Jones Internet Index Fund (FDN)First Trust Dow Jones Internet Index Fund follows the Dow Jones Internet Composite Index, giving investors exposure to the broad Internet industry. It holds about 40 stocks in its basket, with Netflix occupying the third spot at 10.1%. First Trust Dow Jones Internet Index Fund is the most popular and liquid ETF in the broad technology space, with AUM of $7.3 billion and an average daily volume of around 250,000 shares. FDN charges 49 bps in fees per year and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook. FT Vest Dow Jones Internet & Target Income ETF (FDND)FT Vest Dow Jones Internet & Target Income ETF is an actively managed fund that invests primarily in U.S. exchange-traded equity securities intended to track the Dow Jones Internet Composite Index. It utilizes an "option strategy" consisting of writing (selling) U.S. exchange-traded call options on the Nasdaq-100 Index, or ETFs that track the Nasdaq-100 Index. It holds 41 stocks in its basket, with Netflix occupying the third position at 10.1% share. FT Vest Dow Jones Internet & Target Income ETF has accumulated $6.9 million in its asset base and trades in an average daily volume of about 3,000 shares. It charges 75 bps in annual FANG+ ETN (FNGS)MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar-weighted index. It is designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in its basket in equal proportion, with Netflix's share coming in at 10%. MicroSectors FANG+ ETN has accumulated $479.3 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 109,000 shares a day on average and has a Zacks ETF Rank #3 (Hold) (read: Mag 7 ETFs Surge: Will the Rally Keep Rolling?).Communication Services Select Sector SPDR Fund (XLC) Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services and has accumulated $23.5 billion in its asset base. It follows the Communication Services Select Sector Index and holds 23 stocks in its basket, with Netflix occupying the third position at 8.5% share. Communication Services Select Sector SPDR Fund charges 8 bps in annual fees and trades in an average daily volume of 6 million shares. It has a Zacks ETF Rank #2 (Buy). Invesco Next Gen Media and Gaming ETF (GGME) Invesco Next Gen Media and Gaming ETF offers exposure to companies with significant exposure to technologies or products that contribute to future media through direct revenues. It tracks the STOXX World AC NexGen Media Index, holding 93 stocks in its basket. Netflix is the fourth firm, accounting for 7.9% of the GGME assets. Invesco Next Gen Media and Gaming ETF has amassed $146.3 million in its asset base and charges 61 bps in annual fees. It trades in an average daily volume of 7,000 shares and has a Zacks ETF Rank #3. 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 Netflix, Inc. (NFLX) : Free Stock Analysis Report First Trust Dow Jones Internet ETF (FDN): ETF Research Reports Communication Services Select Sector SPDR ETF (XLC): ETF Research Reports MicroSectors FANG+ ETN (FNGS): ETF Research Reports Invesco Next Gen Media and Gaming ETF (GGME): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
23-06-2025
- Business
- Yahoo
Top Streaming Stocks to Strengthen Your Portfolio in the Digital Age
An updated edition of the May 2, 2025 the last two decades, the entertainment landscape has undergone a transformative shift, moving away from traditional cable television toward digital, on-demand streaming. Although early experiments with streaming surfaced in the 1990s, the real acceleration began with the launch of YouTube in 2005 and Netflix's video-on-demand service in 2007. The rapid adoption of smartphones, widespread broadband access and evolving consumer viewing habits have made streaming the dominant method for consuming media today. Industry giants like Netflix NFLX, The Walt Disney Company DIS and Spotify Technology S.A. SPOT have been at the forefront of this technology enables instant playback of video and audio content over the internet without requiring downloads, offering seamless performance with minimal buffering. Its accessibility across devices such as smartphones, tablets and smart TVs has reshaped media engagement. Audiences are increasingly drawn to the flexibility and convenience of viewing content on their own schedules, often with fewer advertisements than found on traditional platforms. To retain viewer interest, companies are investing heavily in exclusive and original programming, sparking an intense competition dubbed the 'content wars.'Ongoing innovation continues to fuel industry growth. Expanding global internet coverage, the rise of mobile consumption and AI-powered personalization have enhanced the streaming experience. Additionally, the proliferation of connected devices like smart TVs and gaming consoles has broadened the user base for streaming to research by Ampere Analysis, the global video streaming market is expected to generate $190 billion annually from 2 billion paid subscriptions by 2029. While Subscription Video-on-Demand remains dominant, Free Ad-Supported Streaming TV and hybrid models are gaining popularity. Live sports, interactive events and gamified content are further deepening audience investors, streaming stocks offer an attractive prospect as top players continue to drive revenue growth through price adjustments, global expansion and the rising popularity of ad-supported platforms. Initiatives like localized content production and strategic partnerships are further enhancing their international presence, solidifying the streaming sector's reputation as a vibrant and potentially lucrative investment if you want to join the bandwagon, our Streaming Content Thematic Screen could make it easy to identify high-potential stocks in this domain at any given time. Leveraging advanced tools, our thematic screens identify companies shaping the future, making it easier to capitalize on emerging to uncover more transformative thematic investment ideas? Explore 30 cutting-edge investment themes with Zacks Thematic Screens and discover your next big a pioneer in the streaming space, launched its on-demand streaming platform in 2007. Building on its extensive content library and steadily growing its global presence, the company transformed from a humble DVD rental service into a dominant force in the world of digital growth outlook remains strong, driven by its aggressive investment in original content and collaboration with top-tier Hollywood talent. This strategy has significantly enhanced the appeal of its movies and series, helping Netflix stand out in an increasingly competitive streaming landscape. By producing high-quality, exclusive content, the company continues to strengthen its brand identity and viewer loyalty. These efforts not only attract new subscribers but also boost engagement and retention across existing markets, reinforcing Netflix's leadership position in digital entertainment. NFLX carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks expansion has become a cornerstone of Netflix's success. The company's localized content strategy — focused on developing shows and films in native languages —has fueled subscriber growth across diverse markets. Strong viewer engagement, with average watch time nearing two hours daily per user, underscores the effectiveness of this approach. With projects underway in regions like India, Mexico, Germany, France and the Middle East and low-cost mobile plans gaining traction in price-sensitive countries, Netflix is unlocking new growth avenues beyond traditional Western has set its sights on doubling revenues by 2030 and reaching a $1 trillion market capitalization. Key pillars of this strategy include broadening its content library, building a live programming slate, growing its gaming segment and accelerating its ad-supported tier. The ad-supported subscription tier has already gained remarkable traction, with more than 55% of new subscribers in markets where it's available choosing the ad-supported option. Management projects advertising revenues to hit $9 billion annually by 2030, underscoring the potential of ads as a major driver of long-term, sustainable made its foray into the streaming industry in 2019 with the launch of Disney+, rapidly attracting a large subscriber base. The company now operates three major streaming platforms — Disney+, ESPN+ and Hulu — each catering to distinct audience segments. Disney+ delivers content from its vast portfolio, ESPN+ centers on sports, and Hulu provides a mix of original series and licensed content. These platforms are positioned as key long-term growth engines, signaling Disney's transition from focusing solely on subscriber gains to prioritizing has become a major catalyst for Disney's growth, thanks to its strong and diverse content lineup. The platform features an extensive library of films and TV shows from some of the world's most popular entertainment brands, including Marvel, Pixar, Star Wars, National Geographic and exclusive Disney+ the coming years, Disney plans to release several high-profile, big-budget films, many of which will be available on Disney+ at the same time as their theatrical debuts. This strategy is expected to boost viewer engagement and attract new subscribers, reinforcing Disney's competitive edge in the streaming market. DIS currently has a Zacks Rank # remain ahead in an increasingly crowded field, Disney is enhancing its streaming offerings. The addition of an ESPN tile on Disney+ and investing in platform improvements highlight its focus on user experience and content accessibility. Its emphasis on sports content, especially live sporting events, is anticipated to be a significant driver of long-term long-term growth trajectory is underpinned by its expanding presence across music, podcasts and audiobooks. Since its launch in 2008, Spotify has redefined audio streaming, consistently evolving its platform to meet user demand. With a catalog of more than 100 million tracks, nearly 7 million podcasts and hundreds of thousands of audiobooks, Spotify offers unmatched variety. Its move into podcasting and later into audiobooks has broadened its reach, positioning the company at the center of the digital audio platform's global scale — available in more than 180 markets with 678 million monthly active users — continues to fuel growth. Spotify's success in emerging markets, especially in Latin America and the "Rest of World" category, highlights its effective localization strategy. Its targeted efforts, such as low-cost mobile plans in countries like India and Indonesia and support for regional content, have allowed it to expand its subscriber base and deepen user engagement. This results in strong user retention and consistent revenue growth across both Premium and Ad-Supported models. SPOT currently has a Zacks Rank # strategic investments in product innovation and monetization are key growth drivers. The company is scaling its ad-tech capabilities, expanding its Spotify Ad Exchange and automated ad tools to better serve marketers. Simultaneously, its growing audiobooks and podcast ecosystem opens new monetization channels. Its ability to combine content, technology and data-driven personalization supports a clear path for long-term expansion and value creation. 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 Netflix, Inc. (NFLX) : Free Stock Analysis Report The Walt Disney Company (DIS) : Free Stock Analysis Report Spotify Technology (SPOT) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
27-05-2025
- Business
- Yahoo
3 Key Reasons to Buy Netflix Stock Beyond its 33% Year-to-Date Surge
Netflix NFLX has already delivered impressive returns to investors in 2025, with shares climbing 33% 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, Disney and Amazon have lost 22%, 1.5% and 8.4%, respectively, in the same time savvy investors shouldn't let this stellar performance deter them from considering the streaming giant as a long-term investment opportunity. Netflix 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 discuss three fundamental reasons why Netflix stock remains an attractive buy, even after its significant appreciation. Image Source: Zacks Investment Research Netflix recently showcased a remarkable ability to exceed expectations across key financial metrics. The streaming leader delivered earnings per share of $6.61, crushing analyst estimates of $5.68 by an impressive 16.37%. This substantial beat wasn't a one-time occurrence but represents a consistent pattern of outperformance, with Netflix surpassing EPS expectations in four consecutive growth remained robust at $10.54 billion, slightly above the $10.50 billion consensus estimate. More importantly, the company maintained its strong operational discipline, guiding for a 29% operating margin for the full year while projecting $8 billion in free cash flow for 2025. This financial strength provides Netflix with substantial flexibility to continue investing in content while returning cash to shareholders through share Zacks Consensus Estimate for NFLX's 2025 revenues is pegged at $44.46 billion, indicating 13.99% 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. Image Source: Zacks Investment Research See the Zacks Earnings Calendar to stay ahead of market-making company's member retention and acquisition trends remain healthy, with Co-CEO Greg Peters noting that retention characteristics for new subscribers joining during major live events like the Paul-Tyson fight and NFL Christmas Day games mirror those of members who join for other premium content. This indicates Netflix's ability to convert event-driven viewers into long-term subscribers, creating sustainable growth momentum. Netflix's advertising business represents perhaps the most compelling growth catalyst for the company's future. Management expects advertising revenues to roughly double in 2025, driven by the successful rollout of their proprietary ad technology platform across key markets. The company has already launched its first-party ad tech suite in Canada and the United States, with the remaining 10 ad-supported markets scheduled for rollout in the coming technological advancement provides Netflix with unprecedented control over the advertising experience, enabling more sophisticated targeting capabilities and improved buyer experiences. The platform now offers targeting based on Netflix's unique data, including life stage, interests, and viewing mood, while also supporting advertisers' own onboarded audiences and third-party vendor segments. Co-CEO Peters emphasized that this enhanced targeting capability, combined with Netflix's vast content library, creates superior campaign outcomes for advertisers while improving the member advertising opportunity extends far beyond current achievements. Netflix represents only about 6% of consumer spend and ad revenues in the markets it serves, indicating massive room for expansion. With the company's relatively small current advertising footprint providing insulation from broader market softness, Netflix is well-positioned to capture increasing market share as its ad platform matures and advertisers recognize the platform's unique value proposition. Netflix's content strategy continues to evolve and strengthen, with recent announcements demonstrating the company's commitment to premium storytelling across diverse genres and markets. The partnership with Dan Brown for a new Robert Langdon thriller series, co-created with acclaimed showrunner Carlton Cuse, exemplifies Netflix's ability to attract top-tier creative talent and proven intellectual properties. Brown's Langdon series has sold 250 million copies globally and been translated into 56 languages, providing a ready-made international company's global content investment strategy remains robust, with Co-CEO Ted Sarandos highlighting recent commitments, including $1 billion in Mexican production, $2.5 billion in Korean content, and continued expansion across 50 countries worldwide. This localized content creation not only serves regional audiences but also travels globally, creating additional value from each live programming strategy continues to gain traction, with successful events like the Taylor-Serrano fight in July and the expansion to all-day NFL football on Christmas Day 2025. These events generate outsized conversation, acquisition, and retention benefits while commanding premium advertising rates. The company's ability to blend live sports and entertainment with its core on-demand offerings creates a differentiated value proposition that competitors struggle to match. Netflix's combination of strong financial performance, revolutionary advertising capabilities, and expanding content moat positions the company for continued success. While Netflix trades at a premium with a forward 12-month P/S ratio of 10.84 compared to the broader Zacks Broadcast Radio and Television industry's forward earnings multiple of 3.7, 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. Image Source: Zacks Investment Research Investors seeking exposure to the streaming leader should consider Netflix's proven execution ability and multiple growth vectors that extend well beyond its impressive year-to-date performance. NFLX currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 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 Inc. (AMZN) : Free Stock Analysis 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 Investment Research
Globe and Mail
24-04-2025
- Business
- Globe and Mail
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 (
