Netflix (NASDAQ:NFLX) has been on a stellar run and is up 94% in the past year. The stock has been one of the most solid performers since it bottomed out in 2022 and started cracking down on account sharing.
It added over 41 million subscribers in 2024 and crossed the 300 million subscriber milestone. Netflix is entering 2025 with unprecedented momentum, and many think it has won the streaming wars already. It is expanding its content budget to $18 billion for 2025, so can it continue to perform?
NFLX’s performance has significantly outpaced the broader market as it is up 23.7% year-to-date, whereas most other tech stocks are languishing. The company has reached a scale that allows it to invest more in content while maintaining strong margins. The platform's reach now extends across most of the globe, with international markets providing the bulk of its growth. Approximately 60% of Netflix's revenue comes from currencies other than the U.S. dollar.
The company's 2025 content slate includes exciting projects from new film chief Dan Lin, who has already greenlit more than 25 films, including Guillermo del Toro's "Frankenstein" and "Happy Gilmore 2."
On top of that, Netflix is delivering final seasons of hit shows like "Stranger Things" and "Squid Game". Perhaps most significantly, Netflix is diversifying beyond its traditional on-demand model by embracing live programming. The company recently secured exclusive rights to WWE's weekly flagship wrestling series, RAW, and has experimented with live events like NFL games and the Paul/Tyson boxing match.
The pricing power here is very strong, and Netflix increased prices across subscription tiers, with the Standard ad-free plan in the U.S. rising by $2 to $17.49 per month. Even the ad-supported tier saw its first price hike to $7.99. Subscribers are still growing, and the pricing power has allowed Netflix to revise its 2025 revenue outlook upward to between $43.5 billion and $44.5 billion with a 29% operating margin.
The consensus price target of $1,116 implies little upside, and the 43 times forward earnings already prices in the good execution, so I’d rate it a “Hold.”
