Why Netflix Stands Out Amid Market Volatility
The Nasdaq-100 index recently declined as much as 23% from its record peak, placing it in bear market territory. This downturn largely stems from escalating global trade tensions initiated by tariffs imposed by President Donald Trump on imports from key trading partners. In uncertain market conditions, investors generally reduce their stock exposure and move towards safer asset classes, such as cash.
However, not all companies are equally affected by this ongoing trade war, particularly those that focus on digital products rather than physical imports. For example, Netflix (NASDAQ: NFLX) generates revenue through subscriptions for its streaming platform, which provides access to movies and TV shows. Thus far, these digital services have remained exempt from tariffs.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
Netflix’s operations span over 190 countries, providing substantial diversification in its revenue streams. This global reach offers some protection against any potential governmental penalties on digital products. Notably, despite ongoing macroeconomic uncertainties, Netflix did not alter its full-year financial forecast when it announced its first-quarter results for 2025 on April 17.
As of now, Netflix’s stock is only down 8.6% from its all-time high, indicating that it is faring better than many in the broader market turmoil. Investors with an extra $1,000—money they won’t need in the short term—might find Netflix to be a worthy investment at this juncture.
Image source: Netflix.
Netflix’s Dominance in the Streaming Sector
As of the end of 2024, Netflix boasted 301.6 million paying subscribers. The company has opted to discontinue quarterly subscriber reporting to shift investor focus to its financial metrics. Nevertheless, Netflix remains the largest streaming service globally, with Amazon Prime trailing with approximately 200 million subscribers and Walt Disney with 124.6 million for Disney+.
In the first quarter of 2025, Netflix achieved a record $10.5 billion in revenue, a 12.5% increase from the previous year, slightly surpassing management’s growth expectation of 11%. This growth reflects increased revenue from both subscriptions and advertising, the latter becoming crucial on Wall Street.
To leverage this growth, Netflix introduced an ad-supported subscription tier in late 2022. Priced at $7.99 per month for U.S. users, this option is significantly lower than the $17.99 for standard and $24.99 for premium tiers. Importantly, ad-tier subscribers may enhance their value over time as companies increase marketing spending on the platform.
Netflix reported a doubling of its advertising revenue in 2024 and anticipates similar growth in 2025. The launch of its ad-technology platform, Netflix Ads Suite, on April 1 in the U.S. aims to enhance the ability of advertisers to measure campaign performance and target specific audiences, making Netflix an appealing platform for advertising partners.
Live Programming: A Growth Catalyst
Keeping users engaged is vital for increasing advertising revenue. More engagement leads to more ad exposure, which drives revenue growth. Live programming, such as sporting events, is effective in this regard due to the lengthy nature of such broadcasts.
On Christmas Day in 2024, Netflix exclusively aired two NFL games, which attracted about 30 million viewers each, marking a record for the most streamed games in NFL history. Given that NFL games average over three hours, they provide a significant opportunity for heightened user engagement compared to the average two hours spent on Netflix daily. The company plans to repeat this strategy by airing NFL games on Christmas Day in 2025.
Netflix also aired the highly successful boxing match between Mike Tyson and Jake Paul in November, which included a historic women’s undercard match becoming the most-watched in U.S. history. Netflix has plans to host a rematch in July.
For 2025, Netflix anticipates spending a remarkable $18 billion on content production and licensing, outpacing all competitors. Importantly, as the only profitable streaming service, Netflix’s scale allows it to outbid rivals for high-profile live events.
Evaluating Netflix’s Stock Valuation
In the first quarter of 2025, Netflix reported earnings per share (EPS) of $6.61, reflecting a 25% increase year-over-year. With a trailing-12-month EPS of $21.16, the stock currently trades at a price-to-earnings (P/E) ratio of 49.1.
This ratio is considerably higher than the Nasdaq-100’s P/E of 27.2, yet Netflix’s valuation may be warranted given its exceptional historical performance and potential for future growth. Wall Street estimates, according to Yahoo! Finance, predict Netflix’s EPS could reach $25.31 this year, eventually hitting $30.15 by 2026, making its forward P/E more attractive.
Data by YCharts.
Investors looking for substantial long-term gains might find great potential with Netflix. The company estimates its total addressable market to be $650 billion across streaming, advertising, and gaming sectors, with a current market capture of just 6%. This outlook signals a robust growth trajectory ahead.
Although Netflix Stock has dipped only 8% from its all-time high, this may represent an opportune moment for investors to consider a long-term investment.
Should You Invest $1,000 in Netflix Now?
Before you buy…
“`
Netflix Excluded from Motley Fool’s Top Stock Picks for 2023
The Motley Fool Stock Advisor analyst team recently published their list of what they consider the 10 best stocks for investors to buy now. Surprisingly, Netflix did not make the list. According to the team, the stocks selected have significant potential for impressive returns in the coming years.
Reflecting on past successes, consider when Netflix earned its place on this list on December 17, 2004. If you had invested $1,000 at that time, it would now be worth $532,771!* Another notable example is Nvidia, which made the list on April 15, 2005. A $1,000 investment then would be worth $593,970 now!*
It’s important to highlight that Stock Advisor boasts an average total return of 781%, significantly outperforming the 149% return of the S&P 500. To keep up with the latest top 10 list, consider joining Stock Advisor.
*Stock Advisor returns as of April 21, 2025
John Mackey, former CEO of Whole Foods Market, which is an Amazon subsidiary, serves on The Motley Fool’s board of directors. Anthony Di Pizio has no positions in any of the stocks mentioned. The Motley Fool advises and holds shares in Amazon, Netflix, and Walt Disney. Read more about their disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.
