Netflix Thrives Amid Market Challenges with Strong Growth and Subscriptions
This year has posed challenges for many stocks due to unpredictable tariffs, an escalating trade war, persistent inflation, and other economic pressures. Nevertheless, Netflix (NASDAQ: NFLX) stood out by achieving a remarkable 90% rally over the past 12 months, impressing investors with its robust growth rates. Let’s examine Netflix’s performance in this difficult environment and consider if its stock remains a viable investment today.
Netflix’s Performance Over the Past Year
In 2022, Netflix’s revenue growth was limited to just 6%, leading some analysts to claim that its high-growth phase had come to an end. Factors contributing to this slowdown included the ongoing conflict in Ukraine, fierce competition from Disney and others, and the issue of password sharing.
Image source: Getty Images.
However, in 2023, Netflix rebounded with a 7% increase in revenue and is projected to achieve a 16% rise in 2024. The company attributed this revival to strategic price hikes, the introduction of new paid password sharing plans, and a lower-cost ad-supported tier. A lineup of popular shows, such as Griselda, 3 Body Problem, Bridgerton, Fool Me Once, Squid Game 2, and La Palma, attracted more subscribers and contributed to its growth. This acceleration demonstrated that its business model is still thriving.
Throughout the year, Netflix consistently added new subscribers (though it ceased disclosing these numbers in 2025), enjoyed stable double-digit revenue growth, and expanded its operating margins. Earnings per share (EPS) also reflected significant growth, with increases in both double and triple digits.
| Metric | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 |
|---|---|---|---|---|---|
| Paid subscribers | 269.60M | 277.65M | 282.72M | 301.63M | N/A* |
| Revenue growth (YOY) | 14.8% | 16.8% | 15% | 16% | 12.5% |
| Operating margin | 28.1% | 27.2% | 29.6% | 22.2% | 31.7% |
| EPS growth (YOY) | 83.3% | 48.3% | 44.8% | 102.4% | 25.2% |
Data source: Netflix. YOY = Year-over-year. *Stopped disclosing subscribers in 2025.
In comparison, Disney reported 125 million Disney+ subscribers and 178 million combined Disney+ and Hulu subscribers at the end of Q1 2025. Netflix’s ability to sustain and grow its market-leading user base, coupled with rising margins and earnings, indicates that economies of scale are at play. Disney’s streaming services only achieved profitability for the first time in Q3 2024.
Netflix’s Projections for 2025
Netflix anticipates a successful 2025, expecting the return of beloved shows like Squid Game, Wednesday, and Stranger Things to drive further growth. New original shows, like Adolescence, along with several new movies, are expected to provide additional momentum.
For the upcoming first quarter, Netflix predicts a revenue increase of 15.4% year-over-year, an expansion of the operating margin by 610 basis points to 33.3%, and EPS growth of 44.1% to reach $7.03. Although tariffs and inflation may not directly impact demand for its streaming services, Netflix could face indirect effects from heightened production costs, diminished advertising spending, and fluctuations in currency values against the U.S. dollar.
Overall, analysts project Netflix’s revenue and EPS to grow by 14% and 29%, respectively, for the full year. Currently priced at $1,040 per share, it trades at 41 times this year’s earnings. While not a bargain, it does not seem overvalued when considering its long-term growth potential.
Should Investors Buy Netflix Stock?
Despite significant competition, Netflix has repeatedly demonstrated its ability to maintain its position at the forefront of the industry through algorithm-driven recommendations and compelling original programming. As a result, Netflix has become synonymous with premium streaming. Although its stock appears pricey near its all-time highs, many believe it remains a safe option to accumulate, especially as broader market conditions fluctuate. The core business remains insulated from tariff-related turmoil and is poised for continued growth as streaming takes a more significant share of entertainment from traditional television.
Should You Invest $1,000 in Netflix Now?
Before deciding to purchase Netflix stock, consider the following:
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
