Netflix NFLX shares have appreciated 63.3% year to date (YTD), outperforming the broader Zacks Consumer Discretionary sector’s appreciation of 8.6%. 

It has also outperformed the Zacks Broadcast Radio and Television industry’s appreciation of 37.3% year to date. 

NFLX shares’ outperformance can be attributed to its growing subscriber base, driven by expanding local and international content offerings and increasing engagement levels.
 
The company had 282.72 million paid subscribers across 190 countries globally at the end of the third quarter of 2024 and it expects paid additions to increase in the fourth quarter due to normal seasonality.

Netflix is benefiting from its expanding domestic and international content offerings that are aiding in driving user growth. NFLX’s investment in creative communities in India, Japan, Thailand, Korea and other international markets is improving user retention and driving top-line growth.

Netflix, Inc. Price and Consensus

Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote

At the end of the second quarter of 2024, user engagement was reported to be 2 hours of viewing per member per day.

Netflix’s Expanding Indian Portfolio to Benefit Prospects

NFLX recently announced the trailer of Nayanthara: Beyond the Fairytale, a documentary set to launch on Nov. 18, 2024. The documentary will feature narrations from Vignesh Shivan, Rana Daggubatti, Taapsee Pannu, and Nagarjuna Akkineni and will give viewers a peek into the Lady Superstar’s magical life. 

Netflix’s strategy to drive its active user base is focused on regional programming and a diversified foreign language content portfolio. Netflix India’s Maharaja, a historical drama film starring Vijay Sethupathi and Anurag Kashyap, generated a viewership of 22.6 million after its release in June 2024 and is one of the studio's most viewed productions.

Apart from India, Netflix is releasing content for several other international locations like Japan, Korea, Brazil and Thailand, to name a few. 

The company is set to launch two of its biggest Latin American shows in December 2024. Senna, a biopic of one of the greatest Formula One drivers from Brazil and A Hundred Years of Solitude, a show based on Gabriel García Márquez’s novel from Colombia, are some anticipated hits that are expected to increase on-demand viewership in the area in the fourth quarter of 2024 and thereby drive topline. 

In the fourth quarter of 2024, Netflix’s returning series Squid Game S2 and Outer Banks S4, as well as Black Doves, a drama starring Keira Knightley, are expected to drive the top line by increasing user retention and subscription prospects. 

Netflix’s efforts to deliver customized content to viewers by developing and improving monetization and refined plans and pricing aids prospects. While NFLX has increased prices in EMEA countries, it has also altered prices in Spain and Italy.

Further, Netflix’s recent offerings in the live event market have strengthened its leadership position as a streaming service provider by expanding its footprint to engage with customers who are inclined toward live television. 

Mike Tyson and Jake Paul boxing match set to take place on Nov. 15, 2024, and Christmas Day NFL games, with the Kansas City Chiefs against the Pittsburgh Steelers and the Baltimore Ravens against the Houston Texans, are some of its unscripted and high-value live events that are expected to positively impact the on-demand viewership hours in the fourth quarter of 2024.

Netflix’s Guidance Positive

For the fourth quarter of 2024, Netflix expects revenues to be $10.12 billion, indicating an increase of 15% year over year.

The consensus mark for fourth-quarter 2024 revenues is pinned at $10.15 billion, indicating year-over-year growth of 14.95%.

For the fourth quarter of 2024, Netflix expects its earnings to be $4.23 per share.

The Zacks Consensus Estimate for fourth-quarter 2024 earnings is currently pegged at $4.2 per share, up 9.6% in the past 30 days and suggesting a year-over-year increase of 99.05%.

The Zacks Consensus Estimate for 2024 earnings is currently pegged at $19.78 per share, up 64.42% year over year and indicating an increase of 3.7% in the past 30 days. 

NFLX’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, and missed in one, the average surprise being 5.73%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

For fiscal 2025, based on F/X rates as of Sept. 30, 2024, Netflix expects revenues of $43-$44 billion, indicating growth of 11-13% from 2024 revenue guidance of $38.9 billion, driven by an increase in paid subscribers and ARM. 

Netflix expects a fiscal 2025 operating margin of 28% (also based on F/X rates as of Sept. 30, 2024) compared with a forecast for 27% in 2024 and ads revenues are expected to roughly double year over year in 2025.

Should Investors Jump Into Netflix Stock?

Netflix stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.

In terms of the forward 12-month Price/Earnings (P/E) ratio, NFLX is trading at 34.4X, higher than the Zacks Consumer Discretionary sector’s 19.36X.

Netflix faces stiff competition from industry competitors, namely Fox FOXA, Roku ROKU and TEGNA TGNA.

While ROKU’s popularity is driven by the Roku Channel and Roku TV Program, FOXA rides on the growing viewership of Tubi, Fox News and Fox Business Network. TGNA’s long-term agreements with NBC, CBS and ABC are a concern for Netflix’s prospects.

However, NFLX’s expanding international content portfolio and clientele bodes well for the investors. 

Netflix currently carries a Zacks Rank #2 (Buy), which implies that investors may want to jump into NFLX stock.

You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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Netflix, Inc. (NFLX) : Free Stock Analysis Report

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