• Tim Nollen from Macquarie sets a price target of $1,150 for Netflix (NASDAQ:NFLX), indicating a potential upside of 20.55%.
• Netflix's Q4 results showcased a significant surge in stock price, reaching a 52-week high of $999 after reporting sales of $10.24 billion and an EPS of $4.27.
• The introduction of an ad-supported plan has led to substantial user growth, with ad revenue doubling in 2024, highlighting a strategic shift towards advertising to sustain growth.

Netflix (NASDAQ:NFLX) is a leading streaming service provider known for its vast library of movies, TV shows, and original content. The company has been a pioneer in the streaming industry, competing with other giants like Disney+ and Amazon Prime Video. On January 22, 2025, Tim Nollen from Macquarie set a price target of $1,150 for Netflix, suggesting a potential upside of 20.55% from its current price of $953.99.

Netflix's recent Q4 results have significantly boosted its stock price. Following the release of these results, the stock surged by 9%, reaching a 52-week high of $999. This increase of over 100 points from its previous closing price of $869 highlights the market's positive reaction to Netflix's performance. The company's ability to exceed Wall Street's expectations for subscriber growth has been a key driver of this impressive performance.

In its Q4 report, Netflix reported sales of $10.24 billion, surpassing the estimated $10.11 billion. This marks a 16% increase from $8.83 billion in the same quarter the previous year. Additionally, Netflix's Q4 earnings per share (EPS) more than doubled to $4.27, exceeding the expected $4.20 per share. The company has consistently outperformed the Zacks EPS Consensus in its last four quarterly reports, with an average earnings surprise of 7.17%.

Netflix's subscriber growth in the fourth quarter of 2024 was fueled by popular programming, including Christmas Day NFL games and the second season of "Squid Game." However, the company acknowledges that such growth may not be sustainable indefinitely, especially with recent price increases. As a result, Netflix is focusing on its advertising strategy as a potential growth engine. The ad-supported plan, introduced in November 2022, has gained substantial traction, reaching 70 million users worldwide by November 2024.

The ad-supported tier, now priced at $8 per month, accounts for over 55% of new sign-ups in regions where it is available. Initially, Netflix had cautioned that growth in this area would be gradual, but the company has since reported a doubling of its ad revenue in 2024. This shift towards advertising is seen as a crucial component of Netflix's strategy to sustain growth amid market saturation and price adjustments.