Analysts: Netflix’s market cap could reach US$1 trillion
The emergence of Netflix’s streaming service once revolutionised the media market. It unlocked the huge potential of the streaming video sector and demonstrated its profitability. In the 20 years of its existence, the company’s shares have risen by 15720%. Netflix’s market capitalisation reached US$244 billion, making it one of the most expensive companies in the world.
The streaming phenomenon
In 2023, the service generated revenues of US$33.7 billion. This figure has grown by 666% over the last ten years. Over 270 million people use the platform, which is still growing.
One of the critical factors in the company’s success is its commitment to improvement. If you compare the service at the beginning of its development to today, they are two radically different structures. The modern company has taken its services to a new level, particularly in key markets. It has also changed its approach to internal processes. From 2025, the company will no longer report quarterly user growth statistics. Instead, it will focus investor attention on revenue growth and engagement levels. The current financial metrics are as follows:
– 9.3 million net additions in the first quarter;
– revenue increased by 14.8%;
– the number of users increased by 65% compared to Q4 2023.
These dynamics show that people are very interested in streaming video. In addition, innovation has yielded results. Netflix is actively implementing a strategy to stop sharing passwords. This encourages users to register their accounts instead of using friends’ accounts.
The company is paying particular attention to expanding its network. The latest data shows around 500 million households worldwide have smart TVs. This figure does not include China, where Netflix is banned. Therefore, the company has huge potential to expand its customer base.
Financial potential of the service
At the moment, Netflix has reached its maximum profitability and market capitalisation. At the same time, many experts said that the service would never achieve profitability, arguing that it was investing heavily in creating its content. However, their predictions did not come true:
1. In 2023, the company reported a free cash flow of US$6.9 billion.
2. The forecast for the current period is US$6 billion. These funds will remain in the business after investment in content production.
Analysts expect Netflix’s market capitalisation to grow 4x over the next 11 years. Annual growth will be around 13%. Compared to the last decade, the company’s growth rate will slow. Nevertheless, the company will reach a valuation of US$1 trillion.
