It's been a volatile ride for Netflix (NFLX -0.93%) investors. But shares continue to be a big winner. They're up 25% just this year, and they are up 1,230% in the past decade, a monster gain that beats the Nasdaq Composite Index.

If you've got your eye on Netflix, you've come to the right place. Here are three-must know reasons to buy this unstoppable growth stock. Investors should also understand that there's one simple reason to sell shares.

First-mover advantage

As of March 31, Netflix had 270 million subscribers, with a presence in more than 190 countries. And it generated $35 billion in sales in the past 12 months. To be clear, no pure-play streaming service has this kind of reach.

By being the first to market, launching its streaming operations in the U.S. in 2007, Netflix was able to rapidly grow its membership base when competition was limited, simply because it had a superior user experience. Over the past few years, we've seen numerous businesses enter the so-called streaming wars. However, it looks like Netflix has already won the battle.

Financial prowess

The second reason why someone should want to buy Netflix is a direct result of its first-mover advantage. And that's the simple fact that today, this business is flexing its financial muscles.

Netflix has so many customers and produces so much revenue, a nod to its scale, that it's able to spend massive amounts on content each year ($17 billion target in 2024) but still come out profitable. The business reported a stellar 21% operating margin last year, a figure that has steadily expanded in recent years.

Even more impressive, this company is throwing off billions in free cash flow. This is money left over after investing in content acquisition. Management is so confident in Netflix's financial position that the business now has a share buyback program in place.

Netflix's financial prowess puts it in a league of its own in the streaming industry. Walt Disney, perhaps its biggest rival, finally reported positive operating income (counting just Disney+ and Hulu). That goes to show you just how far ahead Netflix is, even though competition is certainly fierce.

Fast-forward on growth

Despite being able to increase revenue and customers 71% and 61%, respectively, between the first quarter of 2019 and the first quarter of 2024, there is still sizable growth potential for this business. Of course, Netflix will focus on trying to add to its subscriber base, particularly in less developed international markets. Co-CEO Greg Peters estimates the company's total addressable market to be 500 million smart-TV households.

To cater to more price-sensitive consumers, Netflix made the right move by launching a cheaper, ad-supported tier. It's registering strong member sign-ups so far.

In the more mature U.S. market, the strategy will likely lean on implementing occasional price hikes. The leadership team has done a fantastic job at executing this playbook in the past.

Rewind on valuation

It's easy to come away impressed by what Netflix has accomplished throughout its history and where it stands today. But that doesn't automatically mean investors should buy the stock.

Clearly, the stock isn't as cheap as it was around the early summer of 2022, when Netflix was losing subscribers and there were fears that its growth was done. But the situation was characterized by heightened uncertainty at the time, something that isn't the case today.

Thanks to the company's strong fundamental performance, especially in the past several quarters, shares trade at a price-to-earnings ratio of 42.3. That's a huge premium to the overall market.

Based on Netflix's trajectory, though, net income is set to soar in the years ahead. And that makes the current valuation seem more palatable. Consequently, I believe investors should still consider buying the stock.