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Netflix (NFLX)
NASDAQ:NFLX
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Netflix
(NASDAQ:NFLX)
75Outperform
Positive Factors
Pricing Strategy
Netflix raised prices without impacting strong retention, highlighting its strong pricing power and market leadership despite the market downturn.
Revenue Growth
Revenue growth of 13% YoY was driven by higher subscription and recent price adjustment, highlighting NFLX's continued focus on its ad-supported business.
Subscriber Growth
Subscriber net add of 4.5mn exceeded consensus expectations 3.9mn by 18%.
Negative Factors
Content Costs
Key risk includes slowing member additions in developed markets and higher-than-anticipated content costs.
Market Competition
Competition is dynamic, valuation stretched, and the macro environment darkening.
Valuation Concerns
Trading at 37x FY25e P/E—well above the industry average of 17x—NFLX’s current valuation suggests limited near-term upside.
Netflix (NFLX) vs. S&P 500 (SPY)
Market Cap
$392.81B
Dividend YieldN/A
Average Volume (3M)5.41M
Price to Earnings (P/E)46.3
Beta (1Y)1.22
Revenue Growth14.11%
EPS Growth47.22%
CountryUS
Employees14,000
SectorCommunication Services
Sector Strength83
IndustryEntertainment
Share Statistics
EPS (TTM)4.27
Shares Outstanding427,757,100
10 Day Avg. Volume5,303,363
30 Day Avg. Volume5,406,746
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)10.53
Price to Cash Flow (P/CF)66.80
P/FCF Ratio66.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$1,160.71Price Target Upside5.37% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering36
Netflix Business Overview & Revenue Model
Company DescriptionNetflix, Inc. is a leading global entertainment services provider, primarily operating in the streaming media sector. The company offers a subscription-based streaming service that allows members to watch a wide variety of TV shows, movies, documentaries, and more across a wide range of internet-connected devices. With a focus on original content production and distribution, Netflix has established itself as a major player in the entertainment industry, delivering personalized viewing experiences to its subscribers worldwide.
How the Company Makes MoneyNetflix makes money primarily through subscription fees from its streaming service. The company offers several tiers of monthly subscription plans that vary by features such as the number of concurrent streams and the video quality (SD, HD, or Ultra HD). Additional revenue streams include licensing agreements for content distribution and DVD rental services, although the latter has become a smaller part of the business. Netflix invests heavily in producing original content, which not only attracts new subscribers but also retains existing ones by offering exclusive shows and movies. Strategic partnerships with content creators, production studios, and technology providers also play a role in enhancing its service offerings and expanding its global reach. While advertising is not a primary revenue source for Netflix, the company has explored ad-supported plans to provide more affordable options for consumers and diversify its income streams.
Netflix Financial Statement Overview
Summary
Netflix demonstrates strong financial health with consistent revenue and profit growth, efficient cost management, and robust cash flow generation. The balance sheet is stable with manageable leverage, though further debt reduction could strengthen the financial position.Income Statement
Netflix's income statement shows a strong performance with a consistent upward trend in revenues and profits. The TTM figures indicate a Gross Profit Margin of 46.87% and a Net Profit Margin of 23.08%, reflecting high profitability. Revenue Growth Rate is robust at 2.93% (TTM), with a notable improvement from the previous year. EBIT and EBITDA margins at 27.64% and 56.61% respectively, indicating efficient operations. Overall, the company exhibits strong revenue growth and profitability.85
Very Positive
Balance Sheet
The balance sheet highlights a solid financial position with a Debt-to-Equity Ratio of 0.63, showcasing moderate leverage. The Equity Ratio stands at 46.13%, indicating a stable capital structure. Return on Equity is strong at 38.57%, reflecting efficient utilization of shareholder funds. While the leverage is manageable, further reduction could enhance financial stability.78
Positive
Cash Flow
Cash flow analysis reveals strong cash generation with an Operating Cash Flow to Net Income Ratio of 0.86, indicating efficient cash conversion. Free Cash Flow Growth Rate is 7.58% (TTM), showing robust cash flow growth. The Free Cash Flow to Net Income Ratio of 0.80 indicates good free cash flow relative to profits, supporting liquidity and potential for reinvestment.80
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 40.14B | 39.00B | 33.72B | 31.62B | 29.70B | 25.00B | Gross Profit |
| 18.82B | 17.96B | 14.01B | 12.45B | 12.37B | 9.72B | EBIT |
| 11.10B | 10.42B | 6.95B | 5.63B | 6.19B | 4.59B | EBITDA |
| 22.73B | 24.88B | 21.51B | 20.33B | 19.04B | 15.51B | Net Income Common Stockholders |
| 9.27B | 8.71B | 5.41B | 4.49B | 5.12B | 2.76B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 8.37B | 9.58B | 7.14B | 6.06B | 6.03B | 8.21B | Total Assets |
| 52.09B | 53.63B | 48.73B | 48.59B | 44.58B | 39.28B | Total Debt |
| 15.02B | 15.58B | 14.54B | 14.35B | 15.39B | 16.31B | Net Debt |
| 7.82B | 7.78B | 7.43B | 9.21B | 9.37B | 8.10B | Total Liabilities |
| 28.06B | 28.89B | 28.14B | 27.82B | 28.74B | 28.22B | Stockholders Equity |
| 24.03B | 24.74B | 20.59B | 20.78B | 15.85B | 11.07B |
| Cash Flow | Free Cash Flow | ||||
| 7.45B | 6.92B | 6.93B | 1.62B | -131.97M | 1.93B | Operating Cash Flow |
| 7.94B | 7.36B | 7.27B | 2.03B | 392.61M | 2.43B | Investing Cash Flow |
| -1.62B | -2.18B | 541.75M | -2.08B | -1.34B | -505.35M | Financing Cash Flow |
| -5.97B | -4.07B | -5.95B | -664.25M | -1.15B | 1.24B |
Netflix Technical Analysis
Positive
1101.53
Price Trends
962.90
Positive
944.06
Positive
828.60
Positive
Market Momentum
33.06
Negative
71.27
Negative
95.36
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NFLX, the sentiment is Positive. The current price of 1101.53 is above the 20-day moving average (MA) of 957.24, above the 50-day MA of 962.90, and above the 200-day MA of 828.60, indicating a bullish trend. The MACD of 33.06 indicates Negative momentum. The RSI at 71.27 is Negative, neither overbought nor oversold. The STOCH value of 95.36 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NFLX.
Netflix Risk Analysis
Netflix disclosed 31 risk factors in its most recent earnings report. Netflix reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Netflix Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $21.54B | 10.49 | 20.09% | 1.10% | 4.29% | 177.70% | |
75 Outperform | $392.81B | 46.31 | 40.84% | ― | 14.11% | 47.22% | |
73 Outperform | $153.46B | 27.56 | 5.54% | 1.05% | 3.97% | 89.53% | |
66 Neutral | $9.59B | ― | -5.37% | ― | 18.03% | 82.15% | |
59 Neutral | $13.72B | 6.74 | -3.43% | 3.83% | 2.31% | -35.22% | |
54 Neutral | $8.31B | ― | -31.94% | 1.70% | -1.48% | -450.15% | |
50 Neutral | $21.25B | ― | -28.54% | ― | -4.91% | -259.71% |
* Communication Services Sector Average
Performance Comparison
NFLX
Netflix
1,101.53
542.04
96.88%
PARA
Paramount Global Class B
11.73
-0.30
-2.49%
DIS
Walt Disney
90.28
-20.79
-18.72%
ROKU
Roku
65.71
7.05
12.02%
FOXA
Fox
49.35
18.14
58.12%
WBD
Warner Bros
8.59
0.44
5.40%
Netflix Earnings Call Summary
Earnings Call Date: Apr 17, 2025 | % Change Since: 13.21% | Next Earnings Date: Jul 16, 2025
Earnings Call Sentiment Positive
The earnings call reflects a generally positive outlook with strong revenue figures, stable retention, and promising growth in advertising revenue. Netflix's strategic global content investments and innovations in AI further bolster the positive sentiment. However, some challenges remain, such as anticipated operating margin pressures and limited growth impact from extra member accounts and gaming.Highlights
Strong Revenue and Market Position
Netflix reported over $40 billion in revenue and has over 300 million paid households, representing an audience of over 700 million individuals. They lead in streaming view share, indicating a strong market position with significant growth potential.
Stable Consumer Sentiment and Retention
Despite economic uncertainties, Netflix reported stable retention and strong engagement. Recent price changes and plan take rates have been in line with expectations, showing resilience in consumer sentiment.
Advertising Revenue Growth
Netflix expects to double its advertising revenue in 2025, supported by a successful rollout of its proprietary ad-tech platform in Canada and the U.S., with plans to expand globally.
Innovations in AI and Content Creation
Netflix is leveraging AI to improve content creation processes, making movies not only cheaper but potentially better. They are actively using AI tools for set references, VFX, and more.
Commitment to Global Content Production
Netflix announced significant commitments to content production in the U.K., Mexico, and Korea, demonstrating a strong global production strategy.
Lowlights
Operating Margin Pressure
Despite a strong first half performance, Netflix forecasts lower operating margins in the second half due to increased content expenses and sales/marketing costs.
Minor Impact of Extra Member Accounts
While extra member accounts provide flexibility, they are not expected to be a major driver of Netflix's business growth in the foreseeable future.
Limited Progress in Gaming
Netflix's gaming segment, while showing some progress, remains a small fraction of the overall content budget. The company acknowledges it is in the early stages of learning and iterating in this space.
Company Guidance
During the Netflix Q1 2025 earnings call, executives shared several key metrics and guidance details. Greg Peters highlighted Netflix's current business strength with over $40 billion in revenue, over 300 million paid households, and an audience of over 700 million individuals, while capturing less than 10% of TV hours and about 6% of consumer spend in ad revenue in its served markets. Despite potential global economic uncertainties, Netflix's retention remains strong, with stable engagement and plan mix, and the company continues to see resilience in its entertainment value with a low-cost ad plan starting at $7.99 in the U.S. and Canada. The company expects to maintain a 29% operating margin for the full year, with content expenses ramping up in the latter half. Netflix aims to double its advertising revenue in 2025, leveraging its proprietary ad-tech platform, and anticipates significant growth in its gaming business, targeting a $140 billion consumer spend opportunity. The guidance also includes an expectation for growing free cash flow, primarily redeployed into share buybacks, absent major M&A activities.Netflix Corporate Events
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Reed Hastings Transitions to Netflix Chairman Role
Positive
Apr 17, 2025
On April 11, 2025, Reed Hastings announced his transition from an executive officer role to Chairman of the Board, effective April 17, 2025, while Timothy Haley decided not to seek re-election as a director. In Q1 2025, Netflix reported a 13% increase in revenue and a 27% rise in operating income year-over-year, driven by membership growth and higher pricing. The company successfully launched its ad tech platform in the US and plans further expansion. Netflix remains optimistic about its 2025 content slate and aims to sustain revenue growth and expand its operating margin.
Spark’s Take on NFLX Stock
According to Spark, TipRanks’ AI Analyst, NFLX is a Outperform.
Netflix demonstrates strong financial performance and positive earnings sentiment, with successful subscriber and advertising growth. Technical indicators show mixed signals, and the valuation suggests potential overvaluation. Challenges with FX volatility and content spending are notable risks.
To see Spark’s full report on NFLX stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.