Netflix (NASDAQ:NFLX) fired another shot in the streaming wars as it seeks to purchase Warner Bros. Discovery in a $72 billion deal. Not to be outdone, however, Paramount Skydance offered an even higher price of $108.4 billion, raising the stakes significantly in this mad scramble for content.
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Netflix currently possesses 8.6% of U.S. television viewing time, and clearly the company has its sights set on increasing this market share in the years to come. While the bulk of the company’s sales come from its subscriptions, Netflix has been growing its advertising revenues. In 2025, the company is expecting to double its advertising revenue from the previous year.
One investor known by the pseudonym Blue Chip Portfolios has been on the fence regarding Netflix, worried by its continued subscription price increases. That’s no longer a concern.
“Previously, I was somewhat skeptical of the company’s pricing power, but the results of recent price increases have changed my mind,” explains the 5-star investor.
Blue Chip cites the strong revenues that Netflix enjoyed over the past two years, citing the company’s increasing revenues between Q2 2023 and Q3 2025 (the last time the investor covered Netflix). This puts to bed Blue Chip’s worries about price increases scaring away customers.
Moreover, the investor is also encouraged by the company’s rising margins, which absent a one-time payment to Brazil, would have exceeded Netflix’s guidance of 31.5%. Blue Chip also anticipates additional margin expansion going forward, thanks to growing price increases and advertising revenue.
While the investor acknowledges that the attempt to acquire Warner Bros. Discovery has pushed down NFLX’s share price, Blue Chip isn’t too concerned. Blue Chip identifies long-term synergies, citing the $2-3 billion in annual run rate synergies the companies expect by year three if the deal goes through.
However, the investor also believes that further industry consolidation will support NFLX even if Paramount is ultimately successful, arguing that fewer entertainment companies will translate into fewer streaming options for consumers to choose from.
“I now find the stock’s valuation highly compelling relative to the broader market and peers given the company’s strong near-term growth prospects and high quality recurring revenue nature of its business,” concludes Blue Chip Portfolios, who rates NFLX a Strong Buy. (To watch Blue Chip Portfolios’ track record, click here)
The majority of analysts on Wall Street are also on board. With 26 Buys, 9 Holds, and 2 Sells, NFLX enjoys a Moderate Buy consensus rating. Its 12-month average price target of $152.39 implies an upside around 40%. (See NFLX stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.