Netflix (NFLX) AI Stock Analysis

• Market Cap: $521.00B
• Dividend Yield: N/A
• Average Volume (3M): 3.53M
• Price to Earnings (P/E): 52.2
• Beta (1Y): 1.22
• Revenue Growth: 14.28%
• EPS Growth: 46.86%
• Country: US
• Employees: 14,000
• Sector: Communication Services
• Sector Strength: 90
• Industry: Entertainment
• EPS (TTM): 7.19
• Shares Outstanding: 424,926,360
• 10 Day Avg. Volume: 2,766,110
• 30 Day Avg. Volume: 3,529,930
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.13
• Enterprise Value/Revenue: 14.17
• Enterprise Value/Gross Profit: 29.23
• Enterprise Value/Ebitda: 20.89
• 1Y Price Target: $1,396.34
• Price Target Upside: 14.13% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 38

• Rating: 80 Outperform
• Price Target: $1,432.00 ▲(17.04% Upside)

Netflix's strong financial performance and positive earnings call outlook are the most significant factors driving the score. Technical analysis supports a bullish trend, while the high valuation reflects market confidence but poses a risk. The strategic board appointment is a positive, though less impactful factor.

Positive Factors

Advertising and Market Expansion

NFLX continues to execute well across content, member growth, and advertising, with an incremental boost from FX and the weaker USD.

Content and Revenue Growth

Revenue growth of 17% YoY was driven by higher subscription revenue due to a strong content slate and flexible pricing of subscription plans.

Viewership and Subscriber Growth

A clear inflection in Netflix's viewership was observed, reversing a 5-month decline.

Negative Factors

Operational Costs

Our 2025 EPS estimate moves modestly lower, as we now assume higher back-half operating expense growth driven by the firm’s continued investment in its ad platform.

Stock Price and Valuation

The recommendation is downgraded from NEUTRAL to SELL, due to the recent share price rally.

Valuation and Market Dynamics

Premium valuation, broader market outperformance, and a quieter catalyst path may weigh on shares.

Netflix Business Overview & Revenue Model

Company Description

Netflix, Inc. is a leading global streaming entertainment service that offers a wide variety of award-winning TV shows, movies, anime, documentaries, and more across a diverse range of genres and languages. Founded in 1997, the company initially started as a DVD rental service and has since transformed into a subscription-based streaming platform, reaching over 200 million subscribers worldwide. Netflix operates in the entertainment sector and focuses on producing original content, acquiring licensing rights for existing content, and providing a user-friendly streaming experience across various devices.

How the Company Makes Money

Netflix primarily generates revenue through its subscription-based model, where users pay a monthly fee to access its vast library of content. The company offers several subscription tiers, each with varying price points and features such as the number of simultaneous streams and video quality. Additionally, Netflix invests heavily in producing original content, which not only attracts new subscribers but also retains existing ones, contributing significantly to its revenue growth. The company also engages in partnerships with various device manufacturers and telecom operators to enhance its service accessibility, further driving its subscriber base and revenue. Moreover, Netflix has explored options for licensing its original content to other platforms, though the bulk of its earnings remains focused on subscriptions.

Netflix Financial Statement Overview

Summary

Netflix showcases strong financial health, with significant revenue and profit growth, efficient cost management, and effective cash flow generation. The income statement is robust, but the balance sheet indicates moderate leverage, suggesting room for improvement in debt management.

Income Statement

Netflix's income statement shows robust growth and profitability. The gross profit margin for TTM is 48.5%, indicating efficient cost management. The net profit margin stands at 24.6%, with a strong trajectory of revenue growth at 6.9% compared to the previous year. EBIT and EBITDA margins are impressive at 29.5% and 42.4% respectively, reflecting effective operational profitability. The company demonstrates strong revenue growth and profitability metrics, positioning it well within the entertainment industry.

Balance Sheet

The balance sheet indicates a stable financial position with a debt-to-equity ratio of 0.58, showing moderate leverage. The return on equity (ROE) for TTM is 41.1%, highlighting high profitability relative to equity. An equity ratio of 47.0% indicates a balanced capital structure. While the company maintains a healthy equity position, there is room for improvement in managing debt levels to further optimize financial stability.

Cash Flow

Netflix's cash flow statement reveals a strong ability to generate cash, with a free cash flow growth rate of 22.8% over the previous year. The operating cash flow to net income ratio is 0.89, signifying efficient cash conversion. The free cash flow to net income ratio is also favorable at 0.83, indicating substantial cash flow generation relative to profits. The company exhibits robust cash flow performance, supporting its growth and operational needs effectively.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	39.00B	33.72B	31.62B	29.70B	25.00B
Gross Profit	17.96B	14.01B	12.45B	12.37B	9.72B
EBITDA	26.31B	21.51B	20.33B	19.04B	15.51B
Net Income	8.71B	5.41B	4.49B	5.12B	2.76B
Balance Sheet
Total Assets	53.63B	48.73B	48.59B	44.58B	39.28B
Cash, Cash Equivalents and Short-Term Investments	9.58B	7.14B	6.06B	6.03B	8.21B
Total Debt	17.99B	16.97B	16.93B	18.12B	18.51B
Total Liabilities	28.89B	28.14B	27.82B	28.74B	28.22B
Stockholders Equity	24.74B	20.59B	20.78B	15.85B	11.07B
Cash Flow
Free Cash Flow	6.92B	6.93B	1.62B	-131.97M	1.93B
Operating Cash Flow	7.36B	7.27B	2.03B	392.61M	2.43B
Investing Cash Flow	-2.18B	541.75M	-2.08B	-1.34B	-505.35M
Financing Cash Flow	-4.07B	-5.95B	-664.25M	-1.15B	1.24B

Netflix Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1223.50
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 1223.5 is above the 20-day moving average (MA) of 1203.83, below the 50-day MA of 1229.94, and above the 200-day MA of 1049.98, indicating a neutral trend. The MACD of 2.45 indicates Negative momentum. The RSI at 53.07 is Neutral, neither overbought nor oversold. The STOCH value of 50.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NFLX.

Netflix Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NFLX	80 Outperform	$521.00B	52.25	43.55%	―	14.28%	46.86%
DIS	78 Outperform	$211.53B	18.45	11.01%	0.85%	5.00%	144.65%
FOXA	78 Outperform	$25.11B	12.18	19.96%	0.91%	16.60%	57.39%
ROKU	77 Outperform	$14.08B	―	-2.47%	―	17.32%	87.79%
PSKY	68 Neutral	$16.86B	―	-0.11%	1.35%	-1.75%	99.73%
WBD	64 Neutral	$29.21B	39.07	2.18%	―	-3.79%	―
Sector *	60 Neutral	$43.56B	4.52	-12.81%	4.07%	1.87%	-43.08%

Netflix Corporate Events

Netflix Appoints Elinor Mertz to Board of Directors

On June 22, 2025, Elinor Mertz was appointed to the Netflix Board of Directors and the Audit Committee, while Leslie Kilgore transitioned to chair the Compensation Committee. The appointment of Mertz, who has a strong background in finance from her tenure at Airbnb and previous roles at Netflix, is expected to enhance the company’s strategic vision and innovation efforts. Concurrently, the Board rejected Jay Hoag’s resignation despite his low attendance in 2024, citing his valuable contributions and commitment to the Board’s activities.

Netflix Board Member Jay Hoag Offers Resignation

On June 5, 2025, Netflix held its annual stockholders meeting where several key proposals were voted on. Notably, Jay Hoag did not receive a majority of votes for his re-election to the board, prompting him to offer his resignation, which is under consideration by the Nominating and Governance Committee. The appointment of Ernst & Young LLP as the independent registered public accounting firm was ratified, and executive officer compensation was approved. However, several non-binding stockholder proposals, including those related to climate transition planning and amendments to the Code of Ethics, were not approved.