What Happened?
Shares of streaming video giant Netflix (NASDAQ: NFLX) jumped 5.9% in the afternoon session after the Wall Street Journal reported that the company (NFLX) set a lofty goal to reach a $1 trillion market valuation by 2030. In its annual review, Netflix laid out plans to more than double revenue from $39 billion to $80 billion, signaling aggressive growth expectations likely tied to subscriber expansion, content monetization, and international market expansion.
Additionally, the company aimed to triple its operating income from $10 billion, reflecting a focus on significantly improving profits, likely through increased operational efficiency and a more disciplined approach to content spending. These targets underscored management's ambitious vision and the confidence in the capacity to pull it off.
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What The Market Is Telling Us
Netflix’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 15.4% on the news that the company reported impressive fourth-quarter 2024 results, which blew past analysts' global streaming paid memberships expectations, with a strong net add figure (18.9 million vs. estimates of 9.8 million). This led to a revenue and EPS beat in the quarter.
Additionally, revenue guidance for 2025 beat expectations, and the company spoke optimistically about multiple vectors such as ad revenue, live events, and new content. Netflix's decision to increase pricing on certain subscription plans also reflected management's confidence in its content's quality and suggested potential benefits for both sales and profitability.
Overall, this quarter was strong. Following the strong performance, Barclays upgraded the stock's rating from Sell to Hold, adding, "The company's continued outperformance largely disproves our hypothesis on growth mean reversion and while growth will slow in '25, current operating momentum if sustained, could drive further upside."
Netflix is up 11.7% since the beginning of the year, and at $989.59 per share, it is trading close to its 52-week high of $1,059 from February 2025. Investors who bought $1,000 worth of Netflix’s shares 5 years ago would now be looking at an investment worth $2,321.
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