Netflix Stock Surges 47.9% in a Year on Content Strategy: Time to Buy?

Netflix NFLX continues to demonstrate why it remains the undisputed king of streaming, with an impressive 47.9% rise in its stock price over the past year, significantly outperforming tech giants like Apple AAPL, Amazon AMZN and Disney DIS, as well as the broader Zacks Consumer Discretionary sector.The company's relentless focus on diverse, high-quality content has positioned it as not just a survivor but a dominant force in the increasingly competitive streaming landscape.Original & Diversified Content Fuels NFLX Subscriber GrowthNetflix's strategy of investing in original programming is paying massive dividends. The Arctic-set comedy series North of North demonstrates how Netflix continues to discover and elevate fresh talent while exploring underrepresented communities and stories. This approach to authentic storytelling resonates globally, contributing to the company's extraordinary growth of 18.91 million subscribers during its fourth quarter — the biggest quarter of net adds in the company's history.Netflix has masterfully balanced its content portfolio across genres, formats, and audience demographics. The return of critically acclaimed series like Black Mirror for its seventh season demonstrates the platform's ability to maintain successful franchises while taking creative risks. This diversity in programming contributes to the platform's average revenue per membership increase of 1% year over year and 3% on a foreign-exchange neutral basis in the fourth quarter.The upcoming release of Carlos Alcaraz: My Way, a three-part documentary following the youngest number 1 in tennis history, signals Netflix's continued expansion into sports storytelling. This strategy attracts sports enthusiasts to the platform while cross-pollinating audiences, contributing to the impressive 15% year-over-year increase in average paid memberships.Strategic IP Acquisitions and Adaptations of NFLXThe streaming giant's new adaptation of Jane Austen's Pride and Prejudice starring Emma Corrin, Jack Lowden, and Olivia Colman showcases its savvy approach to intellectual property. By pairing beloved source material with prestigious talent, Netflix builds anticipation and cultural cachet that translates to subscriber retention and growth, helping drive its total subscriber base to an impressive 301.63 million paid subscribers across more than 190 countries globally, up 15.9% year over year.Financial Performance Supports Bullish OutlookNetflix's financial performance underscores the strength of its content strategy. The company finished 2024 with 302 million memberships, adding 19 million paid subscribers in the fourth quarter alone — the biggest quarter of net additions in its history. Revenues grew to $10.25 billion in fourth-quarter 2024, with operating income reaching $2.27 billion.For 2025, Netflix forecasts revenues of $43.5-$44.5 billion and an operating margin of 29%, up from its previous forecast. Free cash flow is expected to reach approximately $8 billion, providing ample resources for continued content investment.The Zacks Consensus Estimate for NFLX’s 2025 revenues is pegged at $44.47 billion, indicating 14.03% year-over-year growth. The consensus mark for earnings is pegged at $24.58 per share, indicating a 23.95% increase from the previous year.Netflix, Inc. Price and Consensus Netflix, Inc. price-consensus-chart | Netflix, Inc. QuoteFind the latest EPS estimates and surprises on Zacks Earnings Calendar.Despite its dominance, Netflix has only captured approximately 6% of the $650 billion entertainment revenue market in which it operates (excluding China and Russia). With more than 750 million broadband households available in these markets, the runway for growth remains enormous. The company's innovative approach to monetization, including its ad-supported plans that accounted for more than 55% of sign-ups in ad countries in the fourth quarter, positions it well to capture additional market share.Investment OutlookNetflix's introduction of an Extra Member with Ads offering in 10 of the 12 countries where it has an ads plan demonstrates its commitment to flexibility and choice. This approach has proven effective, with membership on the ads plan growing nearly 30% quarter over quarter.For investors looking to capitalize on the streaming revolution, Netflix represents a compelling opportunity at current valuations. The company's proven ability to consistently develop hit programming across genres positions it for sustained growth as global streaming adoption continues. With international markets still showing significant growth potential and Netflix's content strategy more refined than ever, now appears to be an ideal time for investors to add NFLX to their portfolios before the next wave of subscriber and revenue expansion. NFLX currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Apple Inc. (AAPL): Free Stock Analysis Report Netflix, Inc. (NFLX): Free Stock Analysis Report The Walt Disney Company (DIS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks