The Nasdaq Composite has been on a continuous thrill trip for greater than two years and reveals no indicators of slowing. Plenty of components have contributed to the rally, together with waning inflation, falling rates of interest, larger company earnings, and the arrival of artificial intelligence (AI). After rising 43% in 2023, the tech-focused index added one other 29% in 2024. These back-to-back good points bode effectively for the approaching yr, as historical past suggests the bull market will proceed.
Going way back to far as 1972 — the primary full yr the Nasdaq traded — in annually after attaining good points of 28% or extra, the tech-centric index has delivered extra good points of 19%, on common. This appears to counsel there’s extra upside forward. That is not all. Bull markets are likely to final 1,866 days, on common, or greater than 5 years. The present bull market simply handed its two-year anniversary in October, so historical past suggests the rally has room to run.
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Netflix (NASDAQ: NFLX) won’t be the primary inventory that involves thoughts when you concentrate on unstoppable shares — however think about this: The streaming pioneer surged 1,740% over the previous decade. The corporate’s efficiency is not relegated to some dusty previous both. It jumped 83% final yr, almost 3 times the good points of the Nasdaq, and it is already outpacing the tech-centric index to date in 2025. Latest proof suggests there might be extra to come back.
Picture supply: Getty Pictures.
Bullish outcomes
Netflix simply reported its fourth-quarter outcomes and cleared expectations on each metric that issues. Income of $10.2 billion climbed 16% yr over yr and generated sturdy profitability as earnings per share (EPS) of $4.27 soared 102%. Gross sales development was fueled by robust paid subscriber additions of greater than 18.9 million, surging 44%, marking the streamer’s largest quarterly enhance in subscribers ever. The underside line was pushed larger by increasing working margins that elevated by 530 basis points to 22.2%.
For context, analysts’ consensus estimates have been calling for income of $10.1 billion and EPS of $4.20, together with subscriber additions of 9.18 million, so Netflix beat expectations throughout the board.
As importantly, administration is forecasting its development streak will proceed. Netflix is guiding for first-quarter income of $10.4 billion, up greater than 11%, whereas EPS of $4.23 would enhance almost 6% — regardless of robust overseas forex headwinds ensuing from a robust greenback.
Moreover, administration supplied a sturdy full-year 2025 income forecast of $44 billion on the midpoint of its steering, or development of about 13%. Netflix additionally elevated its working margin outlook to 29% for 2025, up from 27% in 2024. This illustrates the corporate’s skill to ratchet up profitability even because it generates sturdy development.
Incremental development is progressing
Administration referred to as out a number of components that contributed to Netflix’s out-sized development in This autumn:
- Squid Video games 2 is on observe to grow to be one of many firm’s most-watched unique collection seasons.
- Carry-On rapidly joined Netflix’s all-time High 10 movies record.
- The Jake Paul vs. Mike Tyson combat grew to become the “most-streamed sporting occasion ever.”
- On Christmas Day, the corporate delivered “the 2 most-streamed NFL video games in historical past.”
Administration additionally cited a trifecta of alternatives that it believes will gas future development.
Netflix has been experimenting with video video games for a while however scored a major win in This autumn. Squid Recreation: Unleashed — based mostly on its hit collection — grew to become the No. 1 free recreation within the Apple App Retailer in 107 international locations and is on observe to be Netflix’s “most downloaded recreation” ever. The corporate plans to capitalize on that success by working to ship a couple of “best-in-class titles” based mostly on its mental property, in addition to celebration video games, youngsters’s video games, and licensed titles like Grand Theft Auto.
Within the wake of the huge success of its stay occasions, Netflix plans to develop its stay streaming. The corporate is augmenting its 52 weekly episodes of WWE Monday Night time Uncooked — the extremely rated wrestling leisure program — with the Display Actors Guild (SAG) Awards, a brand new selection discuss present starring John Mulaney, and Christmas Day NFL video games in 2025. Netflix additionally introduced it had secured U.S. rights to FIFA Ladies’s World Cup Soccer in 2027 and 2031.
Lest there be any doubt, the largest potential alternative is the continued development in its promoting enterprise. Members signing up for the promoting tier elevated 30% quarter over quarter and accounted for 55% of latest subscribers within the international locations the place it reveals promoting. As the corporate expands its viewers, it turns into more and more invaluable to advertisers.
After a hiatus of three years, Netflix introduced it’s growing subscription costs throughout the board, together with on its lowest-priced ad-supported plan. The worth hikes will happen within the U.S., Canada, Portugal, and Argentina. Administration cites its robust slate of upcoming programming and sturdy engagement ranges as supporting the transfer.
Lastly, traders will observe that Netflix at the moment trades for roughly 36 occasions anticipated 2025 earnings, which could seem costly at first look. Nonetheless, as this quarter makes clear, Wall Avenue continues to underestimate the streaming large. Given its robust observe report of development, I might argue that is a good value for a corporation that constantly defies expectations. That is why 2025 might be one other banner yr for Netflix shareholders.
Don’t miss this second probability at a doubtlessly profitable alternative
Ever really feel such as you missed the boat in shopping for essentially the most profitable shares? You then’ll need to hear this.
On uncommon events, our knowledgeable crew of analysts points a “Double Down” stock advice for corporations that they assume are about to pop. If you happen to’re fearful you’ve already missed your probability to take a position, now could be one of the best time to purchase earlier than it’s too late. And the numbers converse for themselves:
- Nvidia: in case you invested $1,000 after we doubled down in 2009, you’d have $357,084!*
- Apple: in case you invested $1,000 after we doubled down in 2008, you’d have $43,554!*
- Netflix: in case you invested $1,000 after we doubled down in 2004, you’d have $462,766!*
Proper now, we’re issuing “Double Down” alerts for 3 unimaginable corporations, and there is probably not one other probability like this anytime quickly.
*Inventory Advisor returns as of January 21, 2025
Danny Vena has positions in Apple and Netflix. The Motley Idiot has positions in and recommends Apple and Netflix. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
