Netflix (NFLX) is a telecommunications company that specializes in subscription-based streaming content. I am bullish on the stock. (See Analysts’ Top Stocks on TipRanks)
If you’re old enough, you might remember a time when Netflix was known for mailing rental DVDs to people’s homes.
Times have certainly changed, and the company has come a long way. Just recently, Netflix’s market capitalization surpassed the $300 billion mark.
This reflects a fast-rising NFLX stock price, which might concern some value-focused investors.
Yet, the stock’s growth shouldn’t be off-putting. There’s plenty of data to suggest that Netflix is still a streaming superstar with the subscriber base to keep the forward momentum going.
A Quick Look at NFLX Stock
The story of NFLX stock in 2021 can be divided into two parts.
In the first part, the stock chopped around but basically went nowhere from January through mid-August.
Somehow, the buyers just couldn’t seem to push NFLX stock above $500 and keep it there. Perhaps there were doubts that Netflix was still the top dog in the realm of content streaming.
However, those doubts would soon be quashed, and the short-sellers would be running for the hills.
Starting in the middle of August, NFLX stock took off like a racehorse. The buyers left the $500 resistance level in the dust as the Netflix share price threatened to breach $700 in early November.
That’s a powerful train to stand in front of – and Netflix’s financial stats suggest that there may be more share-price appreciation to come.
An Across-the-Board Winner
The doubters can complain all day long, but the data simply doesn’t support their argument.
In 2021’s third quarter, Netflix generated $7.48 billion in revenues. Not only is that in line with the company’s guidance, but it’s a 16.3% improvement year-over-year.
Turning to the bottom-line result, Netflix earned $3.19 per share in Q3 2021, beating Wall Street’s consensus estimate of $2.56 per share.
In addition, the company’s quarterly operating margin was 23.5%, up from 20.4% a year ago.
Clearly, Netflix is moving in the right direction as the company successfully works through a pandemic-related issue.
“After a lighter-than-normal content slate in Q1 and Q2 due to COVID-related production delays in 2020, we are seeing the positive effects of a stronger slate in the second half of the year,” Netflix explained in a letter to its shareholders.
Subscriber Count Keeps Growing
Apparently, the streaming revolution is still in full effect – at least, if we gauge this by Netflix’s expanding subscriber base.
This metric might actually be more important than Netflix’s revenues or earnings. After all, the subscribers are the lifeblood of a streaming business like Netflix.
Thankfully, there’s great news to report on that front. During 2021’s third quarter, Netflix added 4.4 million net new subscribers.
As a basis of comparison, the company had anticipated adding 3.5 million net new subscribers. With the new Q3 additions, the total global count stands at a whopping 213.6 million.
This figure will likely be old news fairly soon, though. In the quarter that started in September, Netflix expects to add another 8.5 million net new subscribers.
Some of this might be driven by the popular Squid Game series, which was viewed by an astonishing 142 million households in the first four weeks since the launch of that series.
Wall Street’s Take
Turning to Wall Street, NFLX has a Moderate Buy consensus rating, based on 24 Buys, five Holds, and three Sells assigned in the past three months. The average Netflix price target is $679.13, implying 0.2% downside potential.
The Takeaway
It’s been fascinating – and for some investors, highly profitable – to see Netflix expand so quickly.
Yet, Netflix’s growth story is undoubtedly far from over. The company expects to have many more subscribers, which should have a positive impact on Netflix’s bottom line.
Therefore, don’t assume that NFLX stock is going to pull back anytime soon. The momentum is to the upside, and it’s not likely to slow down now.
Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of Tipranks or its affiliates, and should be considered for informational purposes only. Tipranks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. Tipranks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by Tipranks or its affiliates. Past performance is not indicative of future results, prices or performance.
