Netflix (NFLX 0.39%) is a household name. And it's obvious why: The streaming video service has over 238 million subscribers and a market cap of $169 billion, making it America's 36th-largest public company.

Yet, only 20 years ago, Netflix was a little-known company with an entirely different business model. 

For those wise enough to invest in the company back then, the last 20 years have been very, very good. A modest $5,000 investment in Netflix made in October 2003 would be worth over $750,000 today.

And while it's truly unimaginable that Netflix might repeat anywhere close to this performance again, it is reasonable to ask whether this streaming giant is worth owning going forward. So, let's have a closer look.

NFLX Chart

NFLX data by YCharts

What's going right for Netflix

Let's start with the positives. Netflix is up almost 30% year to date and more than 60% over the past 52 weeks. The company reported solid earnings in July, highlighted by the following:

  • $8.2 billion in revenue, up 3% from a year earlier
  • $3.29 of earnings per share, about 15% above analyst estimates
  • A gain of 5.9 million customers

What's more, the company is now monetizing accounts that have utilized password sharing in the past. It now charges a $7.99/month fee to add additional members outside of a household to an account.

Meanwhile, Netflix's new ad-supported tier continues to gain traction -- albeit slowly. And while the ad revenue from this new venture appears to be limited right now, it represents a future growth driver for Netflix.

What's not working for Netflix

On the flip side, there are a few concerns with the stock. For one thing, its valuation has soared. Netflix shares now trade at a price-to-earnings (P/E) multiple of 39. Not only is that high -- even for a tech stock -- it's above the one-year average of 36. 

A second concern is Netflix's growth, or lack thereof. Granted, it's difficult to maintain a growth rate over 10%, but that's what growth investors are after. And for Netflix, it looks like those days may be over. 

NFLX Revenue (Quarterly YoY Growth) Chart

NFLX Revenue (Quarterly YoY Growth) data by YCharts

The company last reported a revenue growth rate of more than 10% in early 2022. Over the last 12 months, revenue has grown at an average rate of 2.8%. That's a far cry from its five-year average growth rate of 18%.

Similar to its subscriber figures, it looks like Netflix is reaching a saturation point. The only question is, how much pricing power does the company have -- given the number of streaming options that exist today?

Is Netflix a buy now?

For investors, Netflix is a tricky stock to pin down. While its hyper-growth phase has undoubtedly ended, the company still has massive competitive advantages starting with its enormous subscriber base. However, it will be difficult for the stock to maintain its current valuation if it cannot grow at a double-digit rate.

Therefore, growth-oriented investors might consider looking elsewhere, while value investors should keep an eye out for the day when Netflix's valuation makes it more attractive.