NFLX's User Growth Hits Speed Bump: How to Play the Stock in 2025

Financial Performance - The company's third-quarter revenues grew 15% year over year, with operating margin expanding to 30% from 22% in the previous year, indicating successful monetization strategies [2] - Free cash flow for Q3 2024 reached $2.2 billion, up from$1.9 billion the previous year, with full-year guidance of $6.0-6.5 billion, showcasing strong cash generation capabilities [6] - The company has a total debt of$16 billion but a reduced net debt of $6.8 billion, reflecting prudent financial management [6] 2025 Outlook - For 2025, the company projects revenues of$43-44 billion, representing 11-13% growth from 2024's guidance of $38.9 billion, with a target operating margin of 28$5 billion deal with WWE, set to begin in January 2025, which includes exclusive streaming rights [14] - The content slate for 2025 includes anticipated returns of flagship series and notable films, indicating a robust content strategy [5] Competitive Landscape - The streaming landscape is evolving, with increasing competition in sports content, particularly from established players like Disney+ Hotstar and JioCinema in India [7] - The company's ability to maintain its leadership position will depend on the success of its sports entertainment strategy and execution [7] Stock Performance and Valuation - The company's stock surged 91.4% in 2024, outperforming the broader Zacks Consumer Discretionary sector and peers like Apple, Amazon, and Disney [11] - The forward 12-month sales multiple of 9.11 exceeds its five-year median of 6.62, indicating the stock may be trading at a premium to historical valuation [16]