It can be difficult to find great stocks. After all, there are more than 4,000 public companies listed on just the New York Stock Exchange and the Nasdaq.
But occasionally, you come across a stock that is simply too good to ignore.
Netflix (NFLX 9.75%) is hardly an unknown stock. Yet, its familiarity can work against it by obscuring its excellent performance.
Case in point: Netflix co-CEO Ted Sarandos just delivered an outstanding report that should remind everyone of what a juggernaut Netflix has become. Here's what he said.
Image source: Getty Images.
Netflix is running at full steam
Every earnings season, Netflix is one of the first companies to report. This quarter, the company delivered a stellar quarter that sent its shares soaring. As of this writing, Netflix shares trade at over $975, having made a new all-time high just days ago.
NASDAQ: NFLX
Key Data Points
It's all because Netflix is showing impressive results and execution at every key level of its business.
Let's start by noting that Netflix now boasts over 300 million subscribers. That's astounding, not just because of the total (for context, the entire population of the United States is roughly 345 million), but the company's subscriber count is also impressive given the speed of its growth.
Back in 2022, Netflix's subscriber base stood at around 220 million -- and was stagnant. In point of fact, the company's subscriber count actually fell during the first two quarters of 2022 by about 2 million. Shares tumbled, but Netflix's management kept their cool and refocused on driving subscriber growth.
They cracked down on password sharing, launched an ad-supported tier, and, two years later, subscriber growth has come roaring back. All in all, total subscribers have grown by about 36% over the last two-and-a-half years.
As subscriber growth has picked up, so has the rate of Netflix's revenue gains. Total revenue for the company's most recent quarter (the three months ending on Dec. 31, 2024) was $10.2 billion, up 16% from a year earlier and slightly above the company's five-year average of 14.4%.
NFLX Operating Revenue (Quarterly YoY Growth) data by YCharts.
Netflix continues to pummel linear television
One of the biggest reasons why Netflix shares have advanced an eye-popping 81,610% since their debut in 2002 is that Netflix has eaten the lunch of traditional linear television.
Faster internet speeds made reliable video streaming possible, and Netflix was there to capture market share from linear television providers. This trend continues today. In Netflix's earnings call, co-CEO Ted Sarandos pointed out how Netflix's recent Christmas Day NFL games set records as the most-streamed NFL games ever, each with about 30 million viewers.
That's not just a shot across the bow of linear television; it's a direct assault. Live sports are one of the few remaining areas where broadcast and cable television providers have the upper hand on streaming services like Netflix.
And while Sarandos stopped short of signaling a full-fledged jump into live sports, the writing is on the wall. Netflix has the cash flow and reach to support taking a run at live sports and is already dipping its toe in the water by hosting live events like the Mike Tyson / Jake Paul fight, WWE Monday Night Raw, and the previously mentioned NFL games.
Going forward, Netflix could continue to steal market share from linear providers by wading further into live event coverage.
Is Netflix a buy now?
In short, yes, Netflix still looks attractive to me. The company has proven its business model is resilient. Moreover, the long-term decline of linear television will continue to power Netflix in the years to come as high-profile live events (like sports) continue to shift toward streaming.
Granted, Netflix isn't a stock for everyone. Given its rich valuation -- the stock sports a price-to-earnings (P/E) ratio of nearly 50x -- value investors will want to steer clear of the stock.
However, for those investors seeking a growth stock with plenty of gas in the tank, Netflix is worth considering.
