Can This Unstoppable Stock Join Apple, Microsoft, Nvidia, Amazon, Alphabet, and Meta Platforms in the $1 Trillion Club by 2035?

Can This Unstoppable Stock Join Apple, Microsoft, Nvidia, Amazon, Alphabet, and Meta Platforms in the $1 Trillion Club by 2035?

  • 16.03.2025 22:39
  • fool.com
  • Keywords: No companies found

Netflix, with a current market cap of $393B, is poised to potentially join trillion-dollar tech giants like Apple and Amazon by 2035. Despite its high P/E ratio of 45.3, the company's rapid growth, global reach, and innovative strategies position it as a contender. However, investors must weigh this potential against its steep valuation before considering investment.

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Context

Analysis of Netflix's Potential to Join the $1 Trillion Club by 2035

Key Facts and Data Points

  • Market Cap: $393B (as of March 14, 2025)
  • Current Stock Price: $918.00
  • Today's Change: -3.13% ($27.83)
  • Subscriber Base:
    • 167 million in 2019
    • 302 million as of 2025, across 190 countries
  • Revenue Growth:
    • $20B in 2019
    • $39B in 2024
  • Operating Margin Target: 29% for 2025
  • Free Cash Flow Expected: $8B in 2025
  • P/E Ratio: 45.3 (as of March 14, 2025)

Market Trends and Business Impact

  • Netflix has disrupted traditional media with its streaming model, becoming a global leader.
  • Strategic initiatives include:
    • Cracking down on password sharing to increase revenue.
    • Introducing an ad-based tier for price-sensitive customers.
    • Expanding into live events and sports.

Growth Projections

  • Market Cap Requirement: $1 trillion (up from $393B), requiring a 160% increase over the next decade.
  • Historical growth: Market cap increased by 1,320% in the past decade.
  • EPS Growth Needed: 16.7% annual growth to reach $1 trillion market cap with a P/E ratio of 25 by 2035.

Competitive Dynamics

  • Netflix is a category leader in streaming but faces competition from Disney+, Amazon Prime Video, and others.
  • Its first-mover advantage and global scale provide significant competitive edge.

Valuation Concerns

  • P/E Ratio: Currently at 45.3, which may be high given the company's maturity.
  • Motley Fool’s Stock Advisor advises caution, as Netflix wasn't recommended as a current buy despite past success (e.g., Nvidia and Amazon).

Long-Term Effects and Strategic Considerations

  • Netflix's ability to maintain growth through innovation and pricing power is critical.
  • Potential regulatory impacts may arise from anticompetitive practices or data privacy concerns.

Conclusion

While Netflix has significant growth potential, its high valuation and competitive landscape pose challenges. Investors should weigh its future prospects against current metrics before considering investment.