NFLX stock has been a hot topic for investors seeking millionaire-making gains. A $10,000 investment at the IPO would have ballooned to a staggering $5.4 million today.
Despite some tumultuous periods, including recent subscriber declines and increased competition, Netflix has consistently defied expectations and maintained its position as a top player in the streaming industry. However, with NFLX stock currently trading at $555 and a price-to-earnings ratio of 34, some investors may question its potential for further growth.
Recent Performance and Projections
Netflix faced challenges in 2022, including a decline in subscribers and increased competition. Despite challenges, Netflix continues to demonstrate growth and resilience. Its subscriber base has steadily increased, reaching a staggering 269.6 million paid subscribers.
Revenue growth has also been impressive, with double-digit growth recorded over the past few quarters. The company attributes this growth to various factors, including the introduction of new pricing tiers, price hikes for existing subscribers, and the success of hit shows like Griselda and Avatar: The Last Airbender. Additionally, the expansion of ad-supported memberships has further fueled revenue growth.
Future Outlook
Looking ahead, NFLX stock anticipates continued revenue growth of 13% to 15% for 2024, with an expected expansion in operating margins. Analysts project a compound annual growth rate (CAGR) of 12% for revenue and a CAGR of 28% for earnings per share (EPS). However, with NFLX stock currently trading at a premium of 34 times this year’s earnings, some investors question its valuation as a high-growth tech stock rather than a slower-growth media entity.
Looking ahead, if Netflix were to achieve a respectable EPS CAGR of 20% through 2034 and maintain a price-to-earnings ratio of around 30, its stock could potentially reach $3,300 per share in a decade. While this represents a substantial near-sixfold increase from its current price, it falls short of the meteoric gains of the past.
Also read: How To Buy Netflix Stock (NFLX) at a Discount In 2024
Final thoughts
In conclusion, NFLX stock remains a solid investment opportunity in the burgeoning streaming media market. However, investors should temper expectations regarding the likelihood of replicating the extraordinary millionaire-making gains witnessed over the past two decades. While Netflix stock may offer lucrative returns, achieving millionaire status solely through this investment avenue in 2024 may require a more diversified approach and a longer-term investment horizon.