3 reasons why this mega-cap stock will continue to soar beyond 2024

The much talked about 'Magnificent 7' list includes the market-leading tech giants that drive the stock market. But most investors are also familiar with the acronym FAANG, which refers to the best-performing companies over the past decade. Here's how FAANG stocks have performed so far in 2024 compared to the S&P 500 index: ($SPX) 9.5% increase:

In this article, we'll focus on Netflix, the mega-streaming giant with an incredible number of subscribers around the world. Despite stiff competition in the streaming space, Netflix's revenue has skyrocketed from his $15.7 billion in 2018 to the present. $33.7 billion in 2023, and Wall Street analysts believe Netflix has more room to grow. Let's take a closer look.

1. Impressive increase in subscriber numbers

in May 2023, Netflix has launched a paid sharing initiative that is expected to have a negative impact on subscriber growth. However, this strategy has proven successful for the company. By the end of 2023, Netflix has added 13.1 million Subscribers all over the world.

In the first quarter of 2024, the company added: 9.3 million It proves the strength of the platform and brand loyalty. In a letter to shareholders in the first quarter, management said, “Despite expected engagement headwinds from paid sharing and increased consumer choice, our engagement remains healthy and is “The viewing time per account for owner households in the first quarter was stable compared to the same period last year.”

The streamer's total revenue increased 14.8% year over year to $9.4 billion due to membership growth and pricing strategy.

Netflix expects profits to rise $9.5 billion Fourth-quarter revenue was in line with consensus estimates and increased from $8.18 billion in the year-ago period. Management expects stable revenue growth of 13% to 15% in fiscal 2024.

Analysts say sales could rise 14.5% in 2024 and 12% in 2025.

2. Profitability is our strength

In the early days, Netflix's membership growth was an indicator of its growth potential. But the company's revenue and profits are a more reliable indicator of how quickly Netflix is ​​expanding as a global streaming giant.

Remarkably, Netflix's profits are $2.68 per share in 2018 $12.03 per share First-quarter diluted earnings per share increased 83.3% to $5.28, and operating margin increased to 28.1% from 21% in the year-ago period.

The good news is that despite stiff competition in the market, Netflix has a chance to increase its profits. The company said Nielsen data shows Netflix's share of TV viewing (excluding mobile and other devices) is less than 10% in each country, with plenty of room to grow by offering a wider range of original content. It has been shown that. Management raised its operating margin forecast for fiscal 2024 to 25%.

Additionally, Netflix expects its earnings to increase 42.2% year-over-year to $4.68 per share. In contrast, analysts expect second-quarter earnings of $4.73 per share. According to consensus forecasts, revenue is expected to increase by 52% in 2024 and 20.3% in 2025.

3. Cash is king

To sustain long-term growth, Netflix's management team must continue to create diverse and original content, innovate marketing strategies, and focus on generating additional revenue and profits through increased advertising. I think there is. Financially, the company is well positioned to execute on these strategies with a significant free cash flow balance (FCF). We ended the first quarter with an FCF balance of $2.13 billion.

Looking to Wall Street after Netflix's first quarter results. philip securities Analyst Jonathan Wu reiterated his buy rating with a price target of $640. Wu said the company's first-quarter results demonstrated its pricing power as subscriber growth increased despite price hikes. Additionally, Wu believes that Netflix's operating strategies, such as price adjustments, engaging content, and advertising revenue, have the potential to drive organic membership growth and overall performance.

Similarly, CMB International Securities Analyst Sophie Huang reiterated her rating on the stock as a “buy.” Huang said Netflix's profitability could continue to grow thanks to “more efficient content spending, increased share of non-English content, and less competition.” Additionally, analysts believe the stock will benefit from rapid earnings growth.

Netflix's overall rating is “Moderate Buy.” Of the 39 analysts following Netflix stock, 21 recommend a “strong buy,” 2 recommend a “moderate buy,” 15 recommend a “hold,” and 1 recommend a “strong sell.” are doing.based on Analyst average price target Wall Street expects it could rise about 6% from current levels. The highest price target is $800, implying an upside of nearly 31% over the next 12 months.

Netflix Conclusion

Despite stiff competition and challenges, Netflix remains well-positioned for future growth. The company's strong brand, extensive content library, and global footprint provide a solid foundation for continued growth. Additionally, Netflix's focus on innovation and diversification, including its expansion into gaming and expanded merchandising activities, could open up new revenue streams and strengthen its competitive advantage.

It can be a difficult journey in this competitive streaming content industry. alphabet's YouTube, disney (DIS), Amazonsuch as Prime Video. Nevertheless, for those willing to ride out the volatility, Netflix stock can be a worthwhile long-term investment.

On the date of publication, Sushree Mohanty I had no position (directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. Please see the Barchart Disclosure Policy for more information. here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Summarize this content to 100 words
The much talked about 'Magnificent 7' list includes the market-leading tech giants that drive the stock market. But most investors are also familiar with the acronym FAANG, which refers to the best-performing companies over the past decade. Here's how FAANG stocks have performed so far in 2024 compared to the S&P 500 index: ($SPX) 9.5% increase:In this article, we'll focus on Netflix, the mega-streaming giant with an incredible number of subscribers around the world. Despite stiff competition in the streaming space, Netflix's revenue has skyrocketed from his $15.7 billion in 2018 to the present. $33.7 billion in 2023, and Wall Street analysts believe Netflix has more room to grow. Let's take a closer look.

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1. Impressive increase in subscriber numbersin May 2023, Netflix has launched a paid sharing initiative that is expected to have a negative impact on subscriber growth. However, this strategy has proven successful for the company. By the end of 2023, Netflix has added 13.1 million Subscribers all over the world. In the first quarter of 2024, the company added: 9.3 million It proves the strength of the platform and brand loyalty. In a letter to shareholders in the first quarter, management said, “Despite expected engagement headwinds from paid sharing and increased consumer choice, our engagement remains healthy and is “The viewing time per account for owner households in the first quarter was stable compared to the same period last year.”The streamer's total revenue increased 14.8% year over year to $9.4 billion due to membership growth and pricing strategy. Netflix expects profits to rise $9.5 billion Fourth-quarter revenue was in line with consensus estimates and increased from $8.18 billion in the year-ago period. Management expects stable revenue growth of 13% to 15% in fiscal 2024. Analysts say sales could rise 14.5% in 2024 and 12% in 2025.

2. Profitability is our strengthIn the early days, Netflix's membership growth was an indicator of its growth potential. But the company's revenue and profits are a more reliable indicator of how quickly Netflix is ​​expanding as a global streaming giant. Remarkably, Netflix's profits are $2.68 per share in 2018 $12.03 per share First-quarter diluted earnings per share increased 83.3% to $5.28, and operating margin increased to 28.1% from 21% in the year-ago period. The good news is that despite stiff competition in the market, Netflix has a chance to increase its profits. The company said Nielsen data shows Netflix's share of TV viewing (excluding mobile and other devices) is less than 10% in each country, with plenty of room to grow by offering a wider range of original content. It has been shown that. Management raised its operating margin forecast for fiscal 2024 to 25%.Additionally, Netflix expects its earnings to increase 42.2% year-over-year to $4.68 per share. In contrast, analysts expect second-quarter earnings of $4.73 per share. According to consensus forecasts, revenue is expected to increase by 52% in 2024 and 20.3% in 2025. 3. Cash is kingTo sustain long-term growth, Netflix's management team must continue to create diverse and original content, innovate marketing strategies, and focus on generating additional revenue and profits through increased advertising. I think there is. Financially, the company is well positioned to execute on these strategies with a significant free cash flow balance (FCF). We ended the first quarter with an FCF balance of $2.13 billion.

Looking to Wall Street after Netflix's first quarter results. philip securities Analyst Jonathan Wu reiterated his buy rating with a price target of $640. Wu said the company's first-quarter results demonstrated its pricing power as subscriber growth increased despite price hikes. Additionally, Wu believes that Netflix's operating strategies, such as price adjustments, engaging content, and advertising revenue, have the potential to drive organic membership growth and overall performance.Similarly, CMB International Securities Analyst Sophie Huang reiterated her rating on the stock as a “buy.” Huang said Netflix's profitability could continue to grow thanks to “more efficient content spending, increased share of non-English content, and less competition.” Additionally, analysts believe the stock will benefit from rapid earnings growth. Netflix's overall rating is “Moderate Buy.” Of the 39 analysts following Netflix stock, 21 recommend a “strong buy,” 2 recommend a “moderate buy,” 15 recommend a “hold,” and 1 recommend a “strong sell.” are doing.based on Analyst average price target Wall Street expects it could rise about 6% from current levels. The highest price target is $800, implying an upside of nearly 31% over the next 12 months. www.barchart.com
Netflix ConclusionDespite stiff competition and challenges, Netflix remains well-positioned for future growth. The company's strong brand, extensive content library, and global footprint provide a solid foundation for continued growth. Additionally, Netflix's focus on innovation and diversification, including its expansion into gaming and expanded merchandising activities, could open up new revenue streams and strengthen its competitive advantage.
It can be a difficult journey in this competitive streaming content industry. alphabet's YouTube, disney (DIS), Amazonsuch as Prime Video. Nevertheless, for those willing to ride out the volatility, Netflix stock can be a worthwhile long-term investment.

On the date of publication, Sushree Mohanty I had no position (directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. Please see the Barchart Disclosure Policy for more information. here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

https://www.nasdaq.com/articles/3-reasons-this-mega-cap-stock-will-continue-to-soar-in-2024-and-beyond 3 reasons why this mega-cap stock will continue to soar beyond 2024