Investing

Netflix Stock is Worth the Lofty Multiple, Says Wall Street Pro

Joey Frenette

Published: January 2, 2025 9:12 am

It may come as a bit of a surprise to learn that Netflix (NASDAQ:NFLX) stock has been one of the biggest gainers in the S&P 500 for 2024. With shares up just north of 90% on the year, shareholders are sure to be wondering if it’s time to hit the sell button or if the fast-moving streaming giant has more performance to show off.

Undoubtedly, there’s been a lot of incredible content to watch on Netflix of late. From Christmas Day live NFL Football action to Squid Game Season 2, and, of course, the site-breaking success that was Jake Paul vs. Mike Tyson back in November, it seems like few other streamers can offer the pipeline that Netflix can.

But with an extended valuation and heftier expectations from analysts in the new year, questions linger as to how the streaming giant can maintain its recent hot streak of breaking records in live sports and original content.

In any case, I think the genius managers at Netflix know how to engage like few others. And with that, I do view the streamer as a must-watch on any broad market pullbacks going into the new year. Additionally, Wall Street pros are still bullish on the name as it looks to keep the hot run going into 2025.

This Wall Street Pro thinks NFLX stock is bound for four figures

UBS analyst John Hodulik recently hiked his price target on NFLX stock to $1,040 from $825. While he did acknowledge shares are getting a tad on the pricey side, he’s a fan of the content slate, which he describes as “robust.” Such a stacked pipeline, he believes, could keep subscriber growth going strong while boosting the ad-based tier.

He’s absolutely right on all fronts. Netflix is not a cheap stock at 50.5 times trailing price-to-earnings (P/E).

That said, it’s hard not to be bullish as the company looks to enter what could be one of its best content years in a long time.

New seasons of Stranger Things, Wednesday, Squid Game, and other series that could be surprising hits are on top, not to mention a lineup of hit films and yet-to-be-announced live sports that could keep users as engaged as ever. If such content hits the mark, it’s hard not to envision more records being broken in the new year and new all-time highs in store for the stock.

I think Hodulik’s four-figure price target is well-deserved. Whether Netflix opts to split this year, though, is sure to be a question on the minds of many retail investors.

Squid Game Season 2 smashes a record. The franchise could continue to be a driver of shares in 2025.

The latest season of Squid Game was, once again, a profound hit, setting a new premiere week viewing record, with 68 million people tuning in the first four days to catch the hit South Korean thriller. Indeed, there were skeptics who doubted the latest season would be able to capture the attention of viewers as much as the first. Those skeptics have been silenced. As we head into late 2025, viewers will be treated to the third and final season of the hit series. Indeed, it’s hard to remember when the streaming platform was this stacked.

Moving ahead, count on Netflix to keep its foot on the gas as it creates content that makes it difficult for viewers not to binge. Though there’s only one more season of Squid Games left to go, I do view the franchise as one that could pay major dividends for many years after the epic story’s conclusion.

We already have a reality series in Squid Game: The Challenge that had people talking back in 2023 and, more recently, a mobile game that allows players to step into the shoes of a contestant from the comfort of their own homes.

Should Netflix go down the route of a spinoff series while also looking into other video game offerings (perhaps a triple-A title is warranted given the success of challenge-based battle-royale game Fall Guys: Ultimate Knockout), I do think it’s a mistake to think that the Squid Game catalyst will end once the show does later this year.

The bottom line

It’s hard to remember when Netflix was doing this well. It’s going to be tough to top the gains delivered in 2024. But with so many catalysts in the pipeline and ideas to jolt growth, it appears like NFLX can still outpace the rest of the market this new year. Sure, the stock’s expensive, but a few quarterly blowouts could make shares prove cheap today as we kick off a new year.