Up Nearly 90% in a Year: Is Netflix Stock Still Worth Buying?

Core Viewpoint - Netflix has demonstrated resilience and growth in a challenging market environment, with significant revenue and subscriber growth despite broader economic headwinds [2][5][12]. Financial Performance - In 2022, Netflix's revenue growth was only 6%, impacted by external factors such as the Ukrainian war and increased competition [3]. - Revenue rose by 7% in 2023 and is projected to grow by 16% in 2024, driven by price increases, new paid password sharing plans, and a cheaper ad-supported tier [5]. - For Q1 2024, Netflix reported a revenue growth of 14.8%, with an operating margin of 28.1% [7]. - Analysts expect Netflix's revenue and EPS to grow by 14% and 29% respectively for the full year [11]. Subscriber Growth - Netflix's paid subscribers increased from 269.60 million in Q1 2024 to 301.63 million in Q4 2024 [7]. - The company has consistently gained new subscribers, although it plans to stop disclosing this metric in 2025 [6]. Competitive Position - Netflix maintains a significant lead over competitors, with 269.60 million paid subscribers compared to Disney's 125 million Disney+ subscribers [8]. - The company's ability to grow its audience while expanding margins indicates that economies of scale are being realized [8]. Future Expectations - For 2025, Netflix anticipates growth driven by the return of popular shows and new original content [9]. - The company expects a revenue increase of 15.4% year-over-year for Q1 2025, with an operating margin projected to expand to 33.3% [10]. Valuation - Netflix's stock trades at 41 times this year's earnings, suggesting it is not a bargain but also not overvalued relative to its long-term growth potential [11]. - Despite competition, Netflix's strong brand and content strategy position it well for continued growth in the streaming market [12].