It makes sense for Netflix to set an internal target of $1 trillion in market capitalization by 2030, since the streaming behemoth stands to gain whether or not the United States enters a recession.
Jeffrey Wlodarczak, an analyst at Pivotal Research, expressed this opinion when he commented on Netflix’s most recent quarterly results on Friday. Numerous observers, including Wlodarczak, applauded the better-than-expected figures. According to FactSet data, Netflix has a $416.2 billion market capitalization.
Late Thursday, Netflix (NFLX) said that its business is still thriving and that it is well-protected against any economic challenges.
After launching its advertising-backed service in the U.S. on April 1 and ramping up internationally in the second quarter, the firm stated that it still expects to double its increase in advertising income in 2025.
Wlodarczak increased his price objective for the stock by $100, to $1,350 per share, and reaffirmed his buy rating.
“Our view remains unchanged that Netflix has won the global streaming race as further evidenced by these results and this is what, in our opinion, winning looks like,” he stated.
According to him, Netflix provides a “very attractive” price to value for its service, and its advertising division should see rapid expansion.
“Even in a global recession scenario NFLX is likely to be highly resilient,” Wlodarczak stated.
In Wednesday’s after-hours trade, Netflix’s shares increased 3.4%. Due to the Good Friday holiday, stocks are not traded on Friday.
Jason Helfstein of Oppenheimer, who maintained his outperform rating on Netflix’s shares, raised his price objective by $50 per share to $1,200.
According to him, Netflix has not seen a rise in plan downgrades or user attrition, indicating that its decision to raise U.S. rates has been favorably welcomed.
“Despite an uncertain macro, increasing prices in France support confidence in business resilience,” Helfstein stated. “Commentary suggests high confidence in guidance, including ads, even in a weaker macro environment as consumers value TV more during economic uncertainty.”
In addition to raising his price target by $25 per share to $1,200, BMO analyst Brian Pitz reaffirmed his outperform rating for Netflix and stated that he anticipates the company will continue to provide steady advertising growth over the next years.
“Entertainment typically remains resilient during uncertain macro,” he stated. “Management noted that, given its current positioning within the advertising industry, it provides them with ‘some insulation’ as the ad market appears to be weakening.”
According to Robert Fishman, a MoffettNathanson analyst, Netflix has further room for earnings growth depending on how some users respond to increased fees.
“When looking at U.S. revenue per hour viewed, Netflix still appears to be underearning relative to its engagement and even after the recent price increases still has a consumer surplus to further raise prices,” Fishman stated.
According to observers, there are still certain dangers, such the expense of creating the content and the possibility of competition.
