People all over the world gather each night to stream a wide range of movies and shows on the popular streaming platform Netflix (NFLX 0.68%). This has been very good for its business, and it now has hundreds of millions of subscribers worldwide. The company has become a darling in the tech and media landscape, pushing its market cap to $422 billion.
Management has no plans to slow down. A Wall Street Journal article had anonymous sources saying that Netflix's goal over the next five years is to double revenue and more than double its market cap to $1 trillion, which would put the company in an exclusive club.
Let's look at how Netflix has become the king of streaming and whether management can execute its ambitious plan.
NASDAQ: NFLX
Key Data Points
Winning the streaming wars
Many investors doubted Netflix on its long path to where it is today, from the early days of mailing DVDs to its latest efforts to continue increasing subscribers amid intense competition, when many thought Netflix had tapped out its available market.
However, after rolling out higher pricing, new subscription tiers, and adding over 41.3 million new subscribers in 2024, many bulls are now calling the company the winner of the streaming battle. The stock is up about 11% this year and over 78% over the last 12 months.
Netflix recently reported its first-quarter earnings for 2025. This is the first quarter the company is no longer reporting subscriber data, but revenue grew 13% from the prior quarter.
The research firm MoffettNathanson wrote in a report in March: "Netflix has won the streaming wars. Case closed. But where does the company go from here? The short answer: There's lots of runway ahead."
According to the Journal, Netflix executives believe they can grow global subscribers from slightly over 301 million to 410 million by 2030, while doubling revenue from $39 billion in 2024 and tripling its operating profit of $10 billion. MoffettNathanson believes that a key driver of this growth will be in the company's cheaper ad-supported plans.
Netflix offers several tiers of pricing, ranging from an ad-supported plan for $7.99 per month to a premium ad-free plan for $24.99 per month. The variety in pricing plans allows Netflix to be more affordable for people who are willing to watch some ads instead of paying $300 a year for a streaming service.
The Journal said executives are targeting $9 billion of global annual ad revenue by 2030. MoffettNathanson in March was modeling for $6 billion of ad revenue in 2027 and $10 billion by 2027.
Netflix has been one of the few U.S. based streamers to build a worldwide audience, thanks to the global content the streaming site offers and produces. Continued growth in foreign markets will also be key. At the end of 2024, here was the subscriber breakdown by region:
- United States: 89.6 million
- Europe, Middle East, and Africa: 101.1 million
- Latin America: 53.3 million
- Asia-Pacific: 57.5 million
These numbers would indicate there is still plenty of runway to grow abroad.
Average revenue per member in the U.S. was $17.26 at the end of 2024 and as low as $7.34 in the Asia-Pacific region. Moffett Nathanson also thinks Netflix is under-earning in the U.S. When it looks at the company's ad-free plan, it estimates that revenue per hour of streaming is $0.40, which pales in comparison to the likes of Warner Bros' Max and Discovery+ at $0.87 and Paramount Global at $0.86.
Can management pull it off?
Netflix developed an enviable brand, a massive library of content, and a proven playbook for how to succeed abroad. The company has also delved into new forms of content like live programming of sports, which has been a massive draw.
The stock trades at 45 times its operating earnings and about 10 times sales, but has traded at much higher valuations in recent years. Assuming Netflix pulls off its goals of tripling operating income to slightly over $31 billion and doubling revenue to about $79 billion, a similar valuation would yield a market cap of $1.25 trillion based on operating income and $870 billion based on revenue.
Multiples could come down as the company gets bigger and growth starts to slow, but joining the $1 trillion club is certainly in the realm of possibility.
Much remains to be seen whether Netflix can double revenue and triple operating income, but given what management has achieved so far, it has earned significant credibility.
