The Big Red N is flexing its power. Netflix shares zoomed to new all-time highs Wednesday, to nearly $1,000 per share, after the streaming giant posted strong Q4 subscriber additions and announced a series of new price hikes.
Netflix stock opened at $997.66/share Wednesday, up 15%, giving the company a market capitalization of more than $420 billion. After market close a day prior, Netflix reported 18.9 million net new global subscribers — around double analyst expectations — to reach 301.6 million. It also announced fee hikes in the U.S. and other key markets, including on its ad-supported entry-level tier, demonstrating its pricing power.
Wall Street analysts marveled at Netflix’s quarterly report — the final one for which it will report subscriber numbers — and many raised their price targets on the stock. In announcing the Q4 earnings, Netflix raised its 2025 outlook for revenue to be between $43.5 billion and $44.5 billion (up $500 million from its prior forecast) and for operating margin to be 29%, up one percentage point from the prior forecast.
“This is what winning looks like,” Jeffrey Wlodarczak, internet, media, sports and communications analyst at Pivotal Research Group, wrote in a note. “In the end, our view remains unchanged that Netflix has won the global streaming race as evidenced by ‘24 results/raised ’25 guidance (especially relative to its streaming peers’ results), and this is what, in our opinion, winning looks like.” The analyst reiterated a “buy” rating on Netflix shares and raised his year-end target price from $1,100 to $1,250.
The key for Netflix going forward, Wlodarczak continued, is “to press their advantages and keep the subscriber/ARPU flywheel going because the larger they get the more leverage they have over their peers/content creators, the better their product gets (allowing them to drive subscriber/ARPU growth), the more cash they have to spend on compelling content and the bigger the moat grows around their core business model.”
In 2024, Netflix added more than 41 million subscribers — more than double the 20 million forecast by research firm MoffettNathanson. “This is one example, of which there are unfortunately many, in which Netflix proved us wrong,” MoffettNathanson analyst Robert Fishman wrote in a research note.
Netflix’s performance has not conformed with “the general laws of corporate physics” and “time and time again, demonstrated it is impervious to any notion of gravity,” Fishman added. “Or, perhaps better put, Netflix has proven itself to defy any notion of how a media company operates or grows. Netflix has not operated as a media company, but rather as a tech company. And it is that growth mindset — and the subsequent financial results — that helps justify the premium multiple at which the stock currently trades.”
Notably, MoffettNathanson is among the more conservative Wall Street firms in valuing Netflix. It maintains a “neutral” rating on the stock but increased its price target to $850/share (up $180).
After Netflix “smashed” Q4 subscriber expectations, there’s more upside in 2025 and beyond, according to Wedbush Securities analyst Alicia Reese. “While massive subscriber growth was the primary driver in 2024, we expect price increases to drive revenue growth in 2025 and the ad tier to drive revenue higher in 2026,” she wrote in a note. “As Netflix expands from here, its contribution margin can massively exceed our estimates, driving outsized free cash flow.”
Wedbush reiterated its “outperform” rating on Netflix and raised its price target from $950 to $1,150, reflecting a price/earnings multiple of 34X (unchanged) on its 2027 earnings per share estimate.
On the Q4 earnings interview, Netflix co-CEO Greg Peters was asked if the livestreamed events in the quarter — the Jake Paul-Mike Tyson fight and two NFL games on Christmas Day, which both drew massive audiences — were mostly responsible for the subscriber beat. “Yeah, short answer to that question is ‘no,’” Peters responded. “At a high level, we’ve seen broad strength across content categories, across all regions. We’ve seen it throughout the entire year. And as we’ve consistently seen across our history, no single title really drives a majority of our acquisition or engagement.”
Peters also noted that Netflix premiered one of its biggest TV series ever in “Squid Game” Season 2 on Dec. 26. “It’s really the whole service that’s working that delivered the upside that we saw this quarter. The vast majority of our net ads were driven by a broad slate and our portfolio globally,” he said.
That said, the Tyson-Paul fight and NFL Christmas games certainly helped boost subscribers and engagement, Macquarie Equity Research analysts Tim Nollen and Ross Compton said in a note. In addition, Netflix’s launch of “WWE Raw” this month has driven increased engagement, with on-demand viewing up 25% from viewers the day after the live event, the analysts noted. Macquarie reiterated its “outperform” rating and raised target price on Netflix stock from $965 to $1,150/share.
Pivotal’s Wlodarczak believes Netflix should be “using its massive balance sheet/equity to fund acquisitions,” suggesting as examples the Sony Pictures Entertainment studio; sports properties like Formula 1 or TKO Group, parent of UFC and WWE; and potentially video game assets. However, he wrote, “admittedly these type of deals may have material regulatory hurdles.”
