Netflix (NFLX) AI Stock Analysis

• Market Cap: $463.86B
• Dividend Yield: N/A
• Average Volume (3M): 3.82M
• Price to Earnings (P/E): 45.7
• Beta (1Y): 1.17
• Revenue Growth: 15.49%
• EPS Growth: 35.53%
• Country: US
• Employees: 14,000
• Sector: Communication Services
• Sector Strength: 97
• Industry: Entertainment
• EPS (TTM): 5.87
• Shares Outstanding: 423,732,330
• 10 Day Avg. Volume: 5,077,607
• 30 Day Avg. Volume: 3,815,259
• PEG Ratio: 0.67
• Price to Book (P/B): 15.47
• Price to Sales (P/S): 9.82
• P/FCF Ratio: 55.31
• Enterprise Value/Market Cap: 1.14
• Enterprise Value/Revenue: 12.17
• Enterprise Value/Gross Profit: 25.32
• Enterprise Value/Ebitda: 18.20
• 1Y Price Target: $1,402.19
• Price Target Upside: 28.11% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 31

• Rating: 69 Neutral
• Price Target: $1,199.00 ▲(9.54% Upside)

Netflix's overall stock score is driven by its strong financial performance and positive earnings call sentiment, highlighting robust growth in ad sales and viewership. However, the high valuation and bearish technical indicators temper the score, reflecting market concerns about current stock price levels and momentum.

Positive Factors

Revenue Growth

Netflix's ability to capture record TV time shares in key markets indicates strong consumer demand and effective content strategy, supporting sustained revenue growth.

Ad Sales Expansion

The significant growth in ad sales reflects Netflix's successful diversification strategy, enhancing revenue streams beyond subscriptions and supporting long-term financial stability.

Content Success

The success of original content like 'K-Pop Demon Hunters' strengthens Netflix's brand and subscriber retention, while partnerships expand its market influence and revenue potential.

Negative Factors

Brazilian Tax Impact

The unexpected tax expense in Brazil highlights potential regulatory risks that could affect profitability and financial forecasts, necessitating careful management of international operations.

Debt Levels

While leverage is manageable, continued focus on reducing debt is crucial to enhance financial flexibility and reduce interest burden, supporting long-term growth and stability.

High Valuation Concerns

A high valuation can limit stock price appreciation potential and increase investor expectations, potentially impacting future capital raising and strategic investments.

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 exhibits a robust financial profile with strong revenue growth, high profitability margins, and efficient cash flow management. The company maintains a healthy balance sheet with manageable leverage and high returns on equity. While Netflix's financials are strong, continued focus on reducing debt and sustaining cash flow growth will further enhance its financial stability and growth prospects.

Income Statement

Netflix has demonstrated strong revenue growth with a 4.04% increase in TTM, supported by robust gross and net profit margins of 48.09% and 24.05%, respectively. The EBIT and EBITDA margins are also impressive at 29.69% and 66.91%, indicating efficient operational management. The consistent revenue growth trajectory and high profitability margins highlight Netflix's strong market position and operational efficiency.

Balance Sheet

The balance sheet reflects a healthy financial structure with a debt-to-equity ratio of 0.62, showing a manageable level of leverage. The return on equity is notably high at 41.86%, indicating effective use of shareholder funds to generate profits. The equity ratio stands at 47.26%, suggesting a solid equity base relative to total assets. Overall, Netflix maintains a stable financial position with strong returns, though there is room for improvement in reducing debt levels.

Cash Flow

Netflix's cash flow performance is strong, with a 5.48% growth in free cash flow, indicating effective cash management. The operating cash flow to net income ratio is 0.98, and the free cash flow to net income ratio is 0.94, both reflecting efficient conversion of income into cash. The positive cash flow growth and high conversion ratios underscore Netflix's ability to generate and manage cash effectively.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	43.38B	39.00B	33.72B	31.62B	29.70B	25.00B
Gross Profit	20.86B	17.96B	14.01B	12.45B	12.37B	9.72B
EBITDA	29.02B	26.31B	21.51B	20.33B	19.04B	15.51B
Net Income	10.43B	8.71B	5.41B	4.49B	5.12B	2.76B
Balance Sheet
Total Assets	54.93B	53.63B	48.73B	48.59B	44.58B	39.28B
Cash, Cash Equivalents and Short-Term Investments	9.33B	9.58B	7.14B	6.06B	6.03B	8.21B
Total Debt	16.63B	17.99B	16.97B	16.93B	18.12B	18.51B
Total Liabilities	28.98B	28.89B	28.14B	27.82B	28.74B	28.22B
Stockholders Equity	25.95B	24.74B	20.59B	20.78B	15.85B	11.07B
Cash Flow
Free Cash Flow	8.97B	6.92B	6.93B	1.62B	-131.97M	1.93B
Operating Cash Flow	9.57B	7.36B	7.27B	2.03B	392.61M	2.43B
Investing Cash Flow	1.14B	-2.18B	541.75M	-2.08B	-1.34B	-505.35M
Financing Cash Flow	-8.95B	-4.07B	-5.95B	-664.25M	-1.15B	1.24B

Netflix Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1094.56
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NFLX, the sentiment is Negative. The current price of 1094.56 is below the 20-day moving average (MA) of 1181.26, below the 50-day MA of 1204.94, and below the 200-day MA of 1116.50, indicating a bearish trend. The MACD of -22.29 indicates Positive momentum. The RSI at 32.32 is Neutral, neither overbought nor oversold. The STOCH value of 4.66 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NFLX.

Netflix Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DIS	―	$200.79B	17.51	11.01%	0.89%	5.00%	144.65%
FOXA	―	$24.96B	12.10	19.96%	0.90%	16.60%	57.39%
ROKU	―	$14.19B	-233.04	-2.47%	―	17.32%	87.79%
NFLX	―	$463.86B	45.73	42.86%	―	15.49%	35.53%
WBD	―	$52.36B	69.67	2.18%	―	-3.79%	―
PSKY	―	$17.80B	―	-0.11%	1.21%	-1.75%	99.73%
Sector *	―	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%

Netflix Corporate Events

Netflix’s Q3 2025 Earnings Call Highlights Growth

Netflix’s recent earnings call conveyed a predominantly positive sentiment, highlighting significant achievements in ad sales growth, viewership, and content success. While an unexpected Brazilian tax expense was noted, it was framed as a unique issue unlikely to impact future results, maintaining an optimistic outlook for the company’s financial health.

Netflix Reports Strong Q3 Revenue Growth

Netflix, a leading streaming service provider, operates in the entertainment industry, offering a wide array of films, series, and games to a global audience. In its latest earnings report, Netflix announced a 17% revenue growth in Q3, in line with expectations, though operating margins fell short due to a tax-related expense in Brazil. Despite this, the company achieved significant engagement milestones in the US and UK, and recorded its best ad sales quarter ever. Key highlights include the success of its content slate, with hits like ‘KPop Demon Hunters’ and live events such as the Canelo vs. Crawford boxing match. Financially, Netflix reported a Q3 operating income of $3.2 billion, a 12% increase year-over-year, and a diluted EPS of $5.87. Looking ahead, Netflix anticipates continued revenue growth driven by membership increases, pricing adjustments, and ad revenue, with an expected operating margin of 23.9% in Q4. The company remains focused on expanding its content offerings and leveraging AI to enhance user experience and advertising capabilities.