Netflix Shares Surge After Impressive First-Quarter Earnings Report
Shares of Netflix (NASDAQ: NFLX) reached a record high following a first-quarter earnings report that surpassed Wall Street expectations. For the period ending March 31, the streaming service reported a 13% year-over-year revenue increase. Its earnings per share (EPS) reached a new high of $6.61, marking a 25% increase from the same quarter last year.
Despite a 71% rise in its stock price over the past year as of this writing, some investors may consider it too late to buy Netflix shares. However, this perspective may overlook important long-term fundamentals that support the company’s growth.
Strong Foundations Supporting Netflix’s Growth
Netflix appears to be thriving, with management reporting substantial growth in new memberships. Gradual price increases for subscriptions worldwide have bolstered margins and earnings. Additionally, an industry-leading variety of exclusive series and movies is keeping viewers engaged. The company’s exploration of live events like boxing and WWE matches has seen positive viewer reception as well.
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One of the most significant developments for Netflix has been the successful scaling of its advertising-supported tier. This initiative is attracting a diverse range of subscribers and creating new revenue avenues. Co-CEO Gregory Peters noted that the company is “just beginning” to tap into its proprietary ad technology within the $600 billion global advertising market. Although it remains a smaller portion of the overall business, ad revenue is increasingly becoming a key growth driver.
Outlook for Netflix Stock Remains Positive
Looking ahead to 2025, Netflix aims for revenue between $43.5 billion and $44.5 billion, a 13% increase at the midpoint from 2024. The company is also targeting an operating margin of 29%, which would set a new record given last year’s figure of 26.7%. This improvement highlights that Netflix is more profitable than ever, potentially driving the next phase of its stock price increase. For investors, Netflix remains a strong option to consider for a diversified portfolio.
Should You Invest $1,000 in Netflix Today?
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Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
