Netflix (NFLX 0.73%) has made a lot of headlines recently, primarily due to its bid to acquire certain assets from media company Warner Bros. Discovery. This interest was further fueled when Paramount Skydance tried to wrest Warner Bros. from Netflix's grasp with a hostile takeover bid for the company.
The recent drama has caused investors to take a fresh look at Netflix, wondering whether the streaming giant is still a buy. One of the company's biggest competitive moats is underappreciated by investors and is one reason I'm never planning to sell Netflix stock.
Image source: Netflix.
Content is king
When Netflix first debuted streaming video in 2007, the company's "Watch Now" feature was a novel offering and a value-added feature for its DVD-by-mail subscribers. Netflix took a giant step forward in 2012 when it began building a library of original content. It's hard to overstate the importance of that decision, and it gave the streaming pioneer a competitive moat that continues to this day.
Netflix continues to license popular shows and movies to augment its own programming, which combine to give the company one of the largest and most diverse streaming libraries on the planet. Because the roster of content is ever-changing, there's currently no definitive count. In late 2023, Netflix reported that there were over 18,000 titles on its platform. More recent estimates put the total closer to 33,000 by the end of 2025.
This massive content collection, created over more than a decade, represents a strong competitive moat, as rivals soon discovered. The cost to unseat the incumbent was simply too great, as competitors turned their focus to profitability, all but ceding the streaming wars to Netflix.
NASDAQ: NFLX
Key Data Points
The virtuous cycle
This ever-growing roster of viewing choices has helped Netflix amass the world's single largest streaming video subscriber base, with more than 300 million worldwide. The company stopped reporting subscriber numbers in 2024, so that number has no doubt grown considerably since then.
This extensive catalog of content fuels what Netflix has described as a "virtuous cycle." The company's growing subscriber base fuels rising revenue, which helps Netflix invest in even more content, attracting more subscribers, etc.
Don't get me wrong. I think there are plenty of other reasons to own Netflix stock. Management has a strong track record of making decisions that keep the streaming pioneer at the head of the pack. The company still has plenty of expansion opportunities in its global markets, and its ad-supported tier is generating impressive growth.
Moreover, the stock has fallen 34% from its peak amid uncertainty over the Warner Bros. acquisition. This allows astute investors to pick up the stock for just 22 times next year's expected earnings, a bargain for an industry leader with such an unassailable moat.
