Netflix Wants To Be The Next $1 Trillion Company, Analyst Highlights Growth Path

BofA Securities analyst Jessica Reif Ehrlich maintained a Buy rating on Netflix Inc NFLX with a price target of $1,175.00 on Tuesday.

Ehrlich noted that Netflix will be driven by continued positive subscriber and earnings momentum and drivers, including evolving advertising and live opportunities.

Supported by its brand, global subscriber base, position as an innovator, and increased visibility in growth drivers, the analyst noted that Netflix should continue to outperform.

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According to the Wall Street Journal, Netflix targets doubling revenue by 2030 and reaching a $1 trillion valuation (versus ~$400 billion currently, which implies ~16% CAGR).

This validates Ehrlich’s bullish thesis on Netflix as it underscores ample runway for continued growth driven by further subscriber additions, more monetization opportunities (both via pricing and advertising), and a significant ramp in operating income.

Netflix is also targeting $9 billion in advertising revenue by 2030 (implies 12% of total calendar 2030 revenue versus prior comments of 10% over the medium term), which compares to Ehrlich’s estimate of $500 million+ in fiscal 2024 (which the company expects to double in 2025).

Amid recent market volatility, Netflix’s strong subscription model with critical entertainment (which historically has performed well in a recession) has made the stock a defensive choice for investors and driven outperformance versus other technology/Mag 7 companies.

Further, Netflix’s nascent advertising business should be incrementally positive, not negative, even in a more challenging advertising backdrop.

Ehrlich expects shares to react positively to this longer-term outlook.

After a surprising slowdown in net member additions in 2022, Netflix implemented password sharing and introduced an ad-supported tier, accelerating subscriber growth.

Total subscribers have now eclipsed 300 million, following 18.9 million net adds in the fourth quarter (well above consensus and Ehrlich’s forecasts).

Netflix’s year-end 2030 target of 410 million subscribers (~18 million net adds annually) suggests the company still sees a significant growth opportunity, primarily driven by expansion into international markets (e.g., Brazil and India).

At its core, Netflix’s growth algorithm will be driven by subscribers and ARM growth. To the extent the company sees a runway for continued strong subscriber growth, it should give investors confidence in Netflix’s ability to grow over the next several years.

Per the WSJ report, Netflix aims to double revenue by calendar 2030 from a $39 billion base in calendar 2024, which reflects a ~12% calendar 2024-2030 CAGR.

Advertising for Netflix is still a nascent business, but by calendar 2030, the company is targeting $9 billion in total ad revenue (~12% of total revenue versus Ehrlich’s estimate of ~2% in calendar 2024). This would reflect a 50% CAGR in advertising revenue from 2024 to 2030.

Netflix targets a calendar 2030 operating income of triple the $10.4 billion the company reported in calendar 2024. This reflects a calendar 2024-2030 CAGR of ~20% and implies ~ a 40% operating income margin (versus 26.7% in calendar 2024).

Finally, Netflix is aiming to achieve a valuation of $1 trillion, implying a low 30s multiple on calendar 2030 EBITDA using the company’s reported targets (versus the current multiple of ~25 times calendar 2026 EBITDA).

Price Action: NFLX stock closed higher by 4.83% to $976.28 on Tuesday.

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