During the 24 months from the start of 2023 to the end of 2024, the Nasdaq Composite index generated a total return of 87%. This followed a tumultuous period in 2022, but that performance over two years was much higher than investors were used to.
One dominant enterprise, known for its innovative culture and success at disrupting a huge industry, has seen its shares surge 65% in 2023 and 83% in 2024, significantly outperforming the broader index thanks to strong financial performance. And as of April 18, it's up 9% so far this year, while the Nasdaq is down 16%.
It's time to meet the monster stock that continues to crush the market.
Netflix's momentum
Like many internet-enabled businesses, Netflix (NASDAQ: NFLX) benefited from a growth surge during the depths of the pandemic. The progress hit a speed bump in 2022. Since then, however, it's been smooth sailing.
Netflix reported revenue growth of 6.7% in 2023 and 15.6% in 2024, bringing on 71 million net new subscribers during that time. And between 2022 and 2024, operating income soared 86%. With this fundamental momentum, it's no wonder the stock has done remarkably well.
The streaming powerhouse just announced its financial results for the first quarter of 2025. It exceeded Wall Street estimates, posting revenue and diluted earnings-per-share growth of 12.5% and 25.2%, respectively, on a year-over-year basis.
Management continues to highlight the success Netflix is having in the advertising space. Revenue from ads is set to double in 2025. During the fourth quarter last year, the business revealed that 55% of new customers signed up for the ad-based tier in the countries where it was available, demonstrating how popular the option has become.
Resistant to recessionary fears
When asked about the broader macro environment, co-CEO Greg Peters exuded confidence. He said that executives "take some comfort in the fact that entertainment historically has been pretty resilient in tougher economic times." With the cheapest ad tier in the U.S. and Canada at $7.99 per month, management believes the value Netflix provides viewers speaks for itself. "We really do expect the demand for entertainment to remain strong," he continued.
This makes sense conceptually. If consumers are staying home more to save money, they will probably spend more time watching TV. According to Nielsen data, 7.9% of daily TV viewing time is represented by Netflix, so it's in a favorable position to continue seeing robust engagement.
The investment implications are clear. Investors thinking about how to adjust their portfolios with the possibility of an economic downturn on the horizon probably think Netflix looks much more appealing these days.
Even though this is already a dominant enterprise with a presence in 190 countries across the globe, the leadership team is extremely optimistic about Netflix's potential. The company stopped reporting subscriber data, but The Wall Street Journal reported the business hopes to double revenue between 2024 and 2030 to $78 billion, while getting its membership count to 410 million at the end of the decade.
Looking even longer-term, there is a big opportunity. "We still got hundreds of millions of folks to sign up," Peters said. Netflix wants to achieve a $1 trillion market cap by 2030.
Something to think about
From a purely fundamental perspective, there isn't much that investors can criticize. Netflix continues to find ways to win in the media industry. Its financial success speaks for itself. And investors have been rewarded, even in 2025, which has been terrible for the overall stock market.
But can Netflix shares continue to crush it? I'm not overly confident. The current valuation, at a forward P/E ratio of 38.5, is not cheap by any stretch of the imagination. I'll continue to wait on the sidelines for a more attractive entry point.
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Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.
