Why Netflix is the Ultimate Long-Term Hold Despite Risks

Netflix (NFLX) has long been the gold standard of streaming, but skeptics argue that the company's growth is peaking. With a market cap of $500 billion and a stated $1 trillion target by 2030, Netflix faces headwinds like market saturation, rising competition, and economic uncertainty. Yet, its dominance in streaming, pricing power, and diversified revenue streams position it as a rare long-term hold. Let's dissect the case for Netflix—and why its risks may be overblown.

Streaming Dominance: A Fortress Built on Content and Scale

Netflix's Q1 2025 results underscore its unshaken leadership. With $10.54 billion in revenue (up 12.5% year-over-year) and an operating margin of 31.7%, Netflix is outpacing rivals like Disney+ and Prime Video. Its 12% global share of new subscribers—the highest among streaming giants—reflects a strategy that combines blockbuster content (Squid Game, WWE live events) with localized programming tailored to emerging markets.

Crucially, Netflix's Net Promoter Score (NPS) of 42 signals high customer loyalty, while its presence in two-thirds of U.S. video-on-demand households cements its role as a cultural staple. Competitors like DAZN and Apple TV+ are growing, but Netflix's scale and library act as a moat. As Kantar's Andrew Skerratt notes: “Netflix's AI-driven personalization and international diversification ensure it stays ahead.”

Pricing Power: A Subtle but Effective Lever

Netflix's pricing strategy is often misunderstood. While the U.S. premium price has climbed to $24.99—a 107% increase since 2013—this hasn't triggered mass cancellations. Instead, Netflix's crackdown on password sharing (adding a paid “shared plan”) and ad-supported tier (now with 23 million subscribers) have expanded its addressable market without cannibalizing core users.

The math is compelling: Netflix's average revenue per user (ARPU) has risen steadily, even as it targets price-sensitive audiences. With plans to raise prices in key markets like France and Argentina, and a global subscriber base of 301.6 million (up 16% annually), the company's $80 billion revenue target by 2030 looks achievable.

Diversified Revenue Streams: Beyond the Subscription Model

Netflix isn't just a streaming service anymore. Its ad-supported tier, which now contributes $2 billion in annual revenue, is on track to hit $9 billion by 2030. By expanding into live sports (WWE) and events (NFL games), Netflix attracts advertisers seeking large audiences—a trend that could lift ad CPMs from their current $20 baseline.

Meanwhile, Netflix's gaming division, though nascent (less than 1% of subscribers engage daily), offers a glimpse of future potential. Imagine a world where Stranger Things or The Witcher universes span streaming, gaming, and live events—a multimedia ecosystem that monetizes audiences across platforms. Add to this its foray into live theater (Stranger Things: The First Shadow) and retail pop-ups, and Netflix's vision of $1 trillion valuation starts to make sense.

Addressing the Risks

Critics point to market saturation, ad revenue limitations, and the $40 P/E multiple required to hit $1 trillion. Yet:
1. Emerging markets (India, Latin America) offer 80%+ internet penetration growth, while Europe and Asia remain underserved.
2. Ads could hit $9 billion if Netflix scales CPMs to $40–$50, a realistic goal with live sports and better targeting.
3. The $1T target assumes $25 billion in net income—a stretch, but achievable with 30%+ margins and $80 billion revenue.

Even if Netflix falls short of $1 trillion, its $500 billion+ valuation is already a testament to its staying power.

Investment Thesis: Buy the Dip, Hold the Trend

Netflix's stock has underperformed tech peers in recent years, but its Q1 2025 results (beating estimates despite no subscriber data) suggest resilience. With $7.2 billion in cash, a $13.6 billion buyback program, and a 28% operating margin expansion, the company is primed to navigate economic cycles.

Buy recommendation: Accumulate shares on dips below $400 (current price ~$450), aiming for a $600–$700 target by 2026. Avoid overpaying at current levels, but view any pullback as a long-term buying opportunity.

Final Verdict

Netflix isn't just a streaming giant—it's a media conglomerate in the making, leveraging content, data, and innovation to dominate a $200 billion+ global market. Yes, risks exist, but its entrenched position, pricing discipline, and revenue diversification make it a once-in-a-decade hold. For investors with a 5–10 year horizon, Netflix's journey to $1 trillion is far from over.

Stay invested, stay patient.