Netflix: A Buying Opportunity Amid Market Correction

The Nasdaq-100 faces a 10% drop, but Netflix emerges as a buy. Analysts laud its growing subscriber base and innovations, such as an ad-supported tier, making it a strong long-term play.

Date: 28-03-2025

AI Rating: 8

The recent report highlights a significant downturn in the Nasdaq-100 index, driven by heightened market volatility and investor concerns regarding trade and economic uncertainties. However, within this context, Netflix stands out as a potentially lucrative investment opportunity.

Earnings Per Share (EPS): Netflix achieved an EPS of $19.83 in 2024, placing the company in a strong financial position. This high EPS is indicative of the firm’s profitability, particularly impressive given the current competitive landscape within the streaming industry.

Net Income: The company reported a record net income of $8.7 billion—representing a 61% increase from the previous year—on a total revenue of $39 billion. Such remarkable net income growth underscores not only the efficiency of Netflix's business model but also its successful penetration of the market.

Revenue Growth: With a year-on-year revenue growth leading to the record figures mentioned, Netflix’s ability to capture market share through innovative product offerings, notably its ad-supported subscription model, is likely to result in sustained revenue expansion. The company’s forecast of a potential doubling in advertising revenue this year is particularly noteworthy.

Market Position and Evaluation: Analysts suggest that Netflix has indeed 'won the streaming wars'. The firm’s valuation, with a forward P/E ratio of 32 compared to the Nasdaq-100 at a P/E of 29, can be deemed reasonable considering its rapid growth trajectory and expansive market addressability. The broader expectation for Netflix’s EPS is projected to reach $30.28 by 2026, reinforcing the bullish sentiment around the stock.

Despite the overall market being under strain, Netflix’s robust fundamentals, coupled with its growth strategy focusing on live content and innovative pricing tiers, position it as a resilient stock within the tech sector. Investors may find the current downturn as an attractive entry point to capitalize on potential future gains.

Stocks: NFLX