Netflix stock forecast today
$984.42
3.23% upModerate purchase
Based on 35 analyst ratings
| High expectations | $1,494.00 |
|---|---|
| Average expectations | $984.42 |
| Low expectations | $585.00 |
Netflix stock forecast details
Netflix Nasdaq:NFLX It completely crushed analyst expectations in its latest earnings report, sending shares up more than 14% in after-hours trading on January 21. The company’s consumer discretionary subscriber base has grown by an incredible 19 million. That helped the stock rise above its all-time high in late 2024. Netflix stock outperformed dramatically in 2024, rising 83%, more than triple the return of the S&P 500. This post-earnings rally ended the decline The company’s last when its shares fell by more than 10% between December 11, 2024 and January 13, 2025.
Below, I’ll break down the report that sent the stock skyrocketing and detail the events that allowed for this massive success. I’ll also share my thoughts on why Netflix stock will continue to reach all-time highs in 2025 and beyond.
Netflix subscriber additions blow estimates out of the water
Netflix’s increase of 19 million subscribers was very impressive, nearly doubling the 8.9 million expected on Wall Street. The absolute number of quarterly subscriber additions was the largest in the company’s history. Overall, this helped the company grow its subscriber count by 40% for the full year of 2024. This shows Netflix’s ability to continue growing at a rapid pace despite already being the largest streaming service in the world. Revenue exceeded estimates by $140 million Up to $10.25 billion. The company beat strongly on earnings per share (EPS) as well. It also raised its 2025 revenue guidance by $500 million.
Significant new releases on the platform, as well as the company’s move toward live sports, have helped drive explosive subscriber growth. This included the series premiere of Squid Game: Season 2, which is now the third most watched television season in the company’s history. In addition, the company’s broadcast of the Jake Paul vs. Mike Tyson boxing match and two National Football League matches on Christmas Day attracted significant viewership.
Overall, these events were watched by 108 million and 65 million viewers, respectively. While these developments helped Netflix significantly close out 2024, the company’s future plans show that the growth is far from over.
Netflix can raise prices without losing users
Another big development from Netflix’s earnings call was the company’s decision to charge increased subscription prices. The company’s prices will increase across its standard, premium and ad-based subscriptions. Increases will range from 8% to more than 16% in the United States, depending on the plan. This is the first time Netflix has raised prices on its most popular standard plan since 2022.
This represents a rare opportunity for the company to increase revenues. However, the last time Netflix increased prices for this category, it saw a significant spike in churn. Churn measures the percentage of users who stop using a product over a period. The churn rate increased from 2% in 2021 to 3.5% during the first nine months of 2022.
However, there are reasons to believe that this will not be the case this time. First, the high lag rate in 2022 coincided with a significant increase in lag rate among most streaming services. This makes it difficult to determine how much of a negative impact price increases have actually had.
Second, Netflix is preparing to do just that It remains the cheapest streaming service Users can purchase every hour of viewing. This is a testament to Netflix’s ability to produce a lot of high-investment content, which has resulted in the company maintaining an industry-leading low churn rate.
Furthermore, allowing Netflix to minimize disruption from price increases is standard with advertising. The company introduced it in October 2023. Even with the price of this level rising to $7.99, it remains price pegged. The lowest priced plan offered since 2017. The lower-priced plan is more likely to attract cash-strapped users affected by price increases. They should trade it as prices rise rather than cancel their subscription entirely.
Live events and ad growth are drivers of long-term success
Netflix, Inc. pricing chart (NFLX) for Wednesday, January 22, 2025
The advertising level feeds into another one of Netflix’s key initiatives for 2025: increasing ad revenue. Netflix doubled the size of this business in 2024 and plans to do so again in 2025. This is still a relatively small portion of the overall business, making it a long-term growth driver.
Finally, the company is just getting started in the live events space. This will be another driver of long-term growth, as evidenced by the success achieved to date. The company will continue to host WWE Raw and has signed a deal to do so broadcast Women’s World Cup 2027 and 2031 exclusively.
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