Last Thursday, for the quarter ending March 31st, Netflix (NASDAQ:) reported a 12.5% revenue increase in Q1 2025 to $10.54 billion from the year-ago quarter. At nearly a $420 billion market cap, the entertainment giant is aiming for a $1 trillion milestone by 2030.
Netflix leadership views this goal as feasible by enhancing three pillars: subscriber count, ad revenue, and expansion into densely populated markets such as India and Brazil. The implication is that investors should expect ~15% annual gains in the next five years, making the stock an attractive equity. Year-to-date, Netflix stock is up 10.3% to $996 per share. But how feasible is the company’s ambition?
Vanguarding Global Monoculture
It is no secret that the US hegemony, via its Big Tech cluster, is also at the forefront of creating a global monoculture. At a glance, it may seem as if diverse cultures are catered to, but in practice the consumer-driven imperatives in fashion, music, entertainment and media are creating a leveling effect.
And the greater the leveling effect, the lesser is the friction in deploying mediatic products. In turn, more region-centric companies receive a disadvantage, which only strengthens Netflix.
Netflix co-CEO and Chief Content Officer Ted Sarandos noted in early 2021 that Netflix’s content creation policy relies on casting a wide net. The company even consulted the USC Annenberg Inclusion Initiative to maximize inclusion in the entire production pipeline, from screenwriters and actors to producers.
Although some critics may call Netflix’s policy an ideological capture, the company is moving ahead of trends. Case in point, the proportion of Caucasians in the US is steadily decreasing, presently under 60%.
The same trend applies globally, with people of European descent representing under 8% of the world’s population. Having expanded in Latin America in 2011, Netflix demonstrated its wide-net prowess by gaining 40.3 million subscribers by 2023, of which Brazil alone netted 14.4 million.
Altogether, this is why Netflix’s $1 trillion market cap goal is attainable. After all, by establishing a global presence so early in the streaming technology, Netflix is likely to become the Google of entertainment.
Netflix Subscription Growth
In Q1 2025, Netflix achieved the highest operating margin of 31.7% vs. 28.1% in the year-ago quarter, and significantly above the 22.2% margin in the prior quarter. Likewise, the company’s net income increased from $2.3 billion in Q1 2024 to $2.89 billion.
For the next quarter, Netflix projects an even higher operating margin of 33.3% and a similar year-over-year revenue growth of 15.4%.
Although Netflix stopped reporting subscriber numbers, the company attributes higher-than-forecasted subscription growth to the revenue beat. Regarding the possibility of recession, Netflix views this macro factor as neutral in the worst-case scenario.
In economic downturns, consumers tend to seek cheap alternatives to outings, and “Netflix and chill” is already an established option. More importantly, the company is looking to double its ad revenue from its cheapest ad-supported subscription tier.
This dynamic is timely, as YouTube has increasingly loaded its platform with ads. By comparison, Netflix’s cheapest tier feels premium. On top of that, Netflix expects total revenue in 2025 to reach $43.5 billion to $44.5 billion, driven by higher subscription pricing and user migration from ad-heavy platforms like YouTube.
According to BARB statistics covering the UK, Netflix is ahead of YouTube in capturing streaming attention hours at 9% vs. 7%, respectively.
On the advertising side, Netflix’s newly launched in-house Ads Suite in the US is expected to roll out across UCAN, EMEA, and LATAM regions, attracting more international brands to advertise on the platform.
Ultimately, it is likely that Netflix will reach the coveted $1 trillion market cap, joining Alphabet (NASDAQ:) (2020), Apple (NASDAQ:) (2018), Microsoft (NASDAQ:) (2019), Amazon (NASDAQ:) (2018), and Meta Platforms (NASDAQ:) (2021).
Netflix Price Targets
To maintain shareholder confidence and materialize the $1 trillion market cap milestone, Netflix spent $3.5 billion in stock buybacks this quarter. There is still $13.6 billion left in the share repurchase program.
According to forecasting data, the average Netflix price target is $1,112.11 compared to the current price of $996 per share. The low target is $833, while the high is $1,494.
With such relatively safe ranges and sound fundamentals, Netflix stock should be considered during major market corrections.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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