Netflix (NFLX) shares have seen a robust 34% surge this year, hinting at continued growth as the streaming behemoth gears up to unveil its Q2 results on Thursday, July 18.
Holding firm as the streaming king in the face of Disney, it’s prime time to explore the compelling case for investing in Netflix stock.
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Compelling Subscriber Growth
Netflix boasts a subscriber base exceeding 270 million, comfortably eclipsing Disney’s total subscribers, which stands at around 150 million when encompassing Disney+, ESPN+, Hotstar, and Hulu.
In Q2, Netflix is anticipated to have onboarded 5.41 million subscribers, a slight dip from the previous year’s 5.89 million additions. Noteworthy is Netflix’s stellar Q1 performance, where it added a whopping 9.32 million subscribers, surpassing expectations and marking a significant surge from the comparable period.
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Q2 Financial Expectations
Leveraging its growing subscriber base, Netflix is slated to witness sales surging by 16% to $9.53 billion in Q2. Furthermore, earnings are expected to soar by 43% to $4.70 per share, a significant jump from $3.29 per share in Q2 2023.
Impressively, Netflix has outperformed earnings projections in three of the last four quarters, with an average earnings beat of 9.26%.
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Monitoring Netflix’s P/E Valuation
In tandem with its expansion, Netflix’s shares have taken on a more attractive valuation, trading at 35.8X forward earnings, a drop from its five-year peak of 108.3X. This valuation also represents a slight discount compared to the median of 40.6X.
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Final Thoughts
Given its more reasonable P/E valuation, the current landscape signals an opportune moment to tap into Netflix’s formidable growth trajectory. Additionally, Netflix typically experiences a surge in stock value post-earnings beat, offering a promising buy-the-dip scenario in case of a market correction, making it an intriguing long-term investment for the foreseeable future.
