How Investors May Respond To Netflix (NFLX) Record Subscriber Growth and New US$15 Billion Buyback

• Netflix reported record subscriber growth in Q4 2024, surpassing 301 million global paid memberships and announcing an additional US$15 billion stock buyback program in early 2025.
• The company is planning to roughly double ad revenue in 2025 while expanding live programming and sports, signaling robust engagement and diversified revenue streams beyond AI-driven initiatives.
• With the acceleration of ad-supported revenue as a focal point, we'll explore how these latest developments shape Netflix's investment narrative.

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Netflix Investment Narrative Recap

To own Netflix stock, an investor needs to have confidence in its ability to grow revenue and profits amid mounting competition and high content costs, while successfully scaling its new ad-supported offering. The recent record subscriber adds and expanded buyback program underscore momentum in ad revenue, which remains the core near-term catalyst. However, these results do not materially change the biggest risk: rising content expenses potentially outpacing engagement or revenue growth in saturated markets.

Among the latest announcements, the US$15 billion share buyback in early 2025 stands out. This move complements Netflix's financial performance and signals management's view of value, but it does not alter the main catalyst, which remains accelerating ad-supported revenue and international market penetration.

Yet, despite this strong top-line story, investors should be mindful that intensifying competition and spiraling content investments could...

Read the full narrative on Netflix (it's free!)

Netflix's outlook projects $59.4 billion in revenue and $17.7 billion in earnings by 2028. This assumes a 12.5% annual revenue growth rate and a $7.5 billion increase in earnings from the current level of $10.2 billion.

Uncover how Netflix's forecasts yield a $1350 fair value, a 11% upside to its current price.

Exploring Other Perspectives

Fair value estimates from 45 Simply Wall St Community members span a wide US$652 to US$1,350 per share range. While the recent subscriber surge adds fuel for optimism, concerns about content spending and global player rivalry linger, underscoring why opinions on Netflix's performance can vary so much.

Explore 45 other fair value estimates on Netflix - why the stock might be worth 46% less than the current price!

Build Your Own Netflix Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Netflix research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free Netflix research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Netflix's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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