Netflix: A Trillion-Dollar Laugh Riot?

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So, Netflix. Last spring, these folks – bless their ambitious hearts – declared they’d be worth a trillion dollars by 2030. A trillion! That’s a lot of streaming. More streaming than anyone needs, frankly. But hey, who am I to judge? I’m just a humble investor, trying to separate the schlock from the…slightly less schlocky. And let me tell you, the stock hasn’t exactly been doing the Charleston since then. It’s more of a…shuffle-drag-repeat.

Nine months have passed, and the market cap has dipped from around $400 billion to $365 billion. A slight stumble, you say? A mere hiccup in the grand scheme of things? Maybe. Unless you consider that their outlook for 2026 is…let’s call it “underwhelming,” and the Warner Bros. Discovery acquisition is causing investors to clutch their pearls. Honestly, it’s like watching a perfectly good pratfall turn into a slow-motion disaster. A very expensive disaster.

But here’s the thing: when a good company stumbles, that’s when we investors start circling. Like vultures. But fashionable vultures. So, now might be a good time to scoop up some shares. Before everyone else realizes they’re missing the show.

How They Plan to Pull a Rabbit Out of Their Streaming Hat

Their financial strategy is surprisingly straightforward. They get monthly subscriptions, which gives them a pretty good idea of how much money is coming in. Then, they set a target for operating margins. And then…content! The endless, insatiable hunger for content. It’s a bit like trying to fill the Roman Colosseum with popcorn. Ambitious, but potentially messy. They aim for those margins, and they usually hit them. Usually. It’s not perfect, but it’s a solid plan, like a well-rehearsed vaudeville routine.

Last year, they announced a plan to double their 2024 revenue of $39 billion by 2030, with that lovely trillion-dollar valuation dangling in front of them. That includes $9 billion in ad sales. Yes, ads! They’re joining the dark side! And they want to boost operating income from $10 billion to $30 billion, giving them a 38.5% operating margin. A bold move, if I may say so. Like trying to juggle chainsaws while riding a unicycle.

They actually outperformed expectations in 2025. Revenue jumped 16%, and operating margins expanded almost 3 percentage points to 29.5%. Advertising revenue more than doubled to $1.5 billion! And they topped 325 million subscribers! It was a triumph! A glorious, streaming-fueled triumph! But then…2026 happened. And everyone started looking at their spreadsheets with a distinctly worried expression.

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Is the Party Over?

That strong performance in 2025? A bit of a fluke, I suspect. A perfect storm of favorable circumstances. And perfect storms, my friends, rarely last.

First of all, the dollar weakened internationally. Which meant subscribers outside the U.S. were effectively paying more. It added over half a billion dollars to their top line! A lovely little windfall. But you can’t count on currency fluctuations. Unless you’re a professional gambler. Or a very lucky leprechaun.

Secondly, they raised prices in the U.S. and Canada. A bold move, but it won’t happen again anytime soon. Especially not while they’re trying to get approval for the Warner Bros. Discovery acquisition. You don’t want to look greedy when you’re asking for a favor. It’s like asking for a loan while simultaneously flashing a wad of cash. Bad form, my friends. Very bad form.

So, their revenue growth in 2026 will depend on advertising and international subscribers. They expect advertising revenue to double to $3 billion. Ambitious! But international growth slowed down in the fourth quarter, up only 16.8%. Which means their overall revenue growth of 12% to 14% might be a bit…optimistic. But hey, a little optimism never hurt anyone. Unless you’re a pessimist.

Despite the slowdown, they’re still on track to meet their 2030 goals. They just need 11% annual revenue growth and consistent margin expansion. Easy peasy, right? (Don’t answer that.)

But then there’s the Warner Bros. Discovery acquisition. $83 billion! That’s a lot of money. It’ll require a lot of debt. And debt, my friends, is like a persistent stagehand. Always lurking in the wings, demanding to be paid. They’re generating free cash flow, thankfully. But it’ll still take years to pay down that debt. And there’s always the risk that the acquisition won’t work out as planned. A bit like trying to merge two rival comedy troupes. It could be brilliant. Or it could be a disaster.

So, are they on pace to meet their financial goals? Probably. But will the market pay 40 times earnings for a company with mid-teens growth? That’s the real question. And that, my friends, is beyond their control. But with the stock trading at 27 times forward earnings, it looks like a pretty good opportunity to buy a wonderful business at a fair price. A bargain, even! So, what are you waiting for? Go forth and invest! And remember, if you lose money, you can always blame me. I insist.

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2026-01-27 14:33