Netflix Stock Worth The Risk At $1,200?

Published: Friday, August 29, 2025 at 9:30 am

Netflix Stock: Is the $1,200 Price Tag Justified?

Netflix (NASDAQ: NFLX) shares have experienced a remarkable surge, climbing approximately 35% this year and over 70% in the last twelve months, pushing the stock price above $1,200. This impressive growth follows the implementation of two key strategies: cracking down on password sharing and introducing an ad-supported subscription tier. Both initiatives have proven successful, boosting subscriber numbers and significantly increasing revenue, with Q2 sales up 16% year-over-year.

The company's success story includes adding over 40 million subscribers in 2024 alone, bringing its total to nearly 302 million, the largest annual growth in its history. The password-sharing restrictions have encouraged users to either pay extra for additional access or subscribe independently. The ad-supported tier has also gained traction, with over half of new subscribers in eligible markets opting for this plan in the latest quarter.

However, analysts are raising concerns about the future. With these strategies now widely implemented, maintaining the same rate of subscriber growth may prove difficult. Netflix has also announced it will cease reporting subscriber figures starting in 2025, signaling expectations for slower growth.

Furthermore, competition is intensifying. Disney+, Amazon Prime Video, and Apple TV+ are all investing heavily in content and bundling services. While Netflix maintains a significant content library, competitors are leveraging their unique advantages. For example, Disney offers bundled packages, potentially reducing subscriber churn.

Price hikes and rising costs also pose challenges. Netflix has increased subscription rates, with its premium plan now costing $25 per month. While price increases can improve margins in the short term, they risk alienating cost-conscious users, especially amid economic pressures. Content costs are also a concern, with Netflix expanding into live sports broadcasting, which comes with higher expenses. Management has warned that operating margins could decline in the latter half of 2025 due to increased amortization and marketing expenses. The company is projected to spend over $20 billion annually on content by 2026.

At its current valuation, Netflix trades at roughly 47 times the consensus earnings for 2025, a significant premium compared to its valuation in mid-2022. This valuation assumes the company can sustain double-digit growth and margin expansion. However, consensus forecasts predict revenue growth of only 15% to 13% for 2025 and 2026, which is less than its historical growth rate.

BNN's Perspective: While Netflix has demonstrated impressive growth, the current valuation appears optimistic given the challenges of slowing subscriber growth, rising competition, and increasing costs. Investors should carefully consider these factors before investing, as the stock price may face downward pressure if growth falters.

Keywords: Netflix, NFLX, stock, streaming, subscribers, revenue, password sharing, ad-supported tier, competition, Disney+, Amazon Prime Video, Apple TV+, valuation, content costs, price hikes, growth, investment.

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