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Netflix (NASDAQ: NFLX) continues to function with momentum on its aspect. By way of the primary seven months of 2025, shares of the worldwide leisure large have climbed 30%, persevering with a powerful streak of market-beating positive aspects.
However proper now, the inventory is taking a breather, because it’s down 13% from its peak (as of July 31). Some traders is perhaps taking earnings off the desk after the corporate’s unbelievable run.
So are Netflix shares a purchase, promote, or maintain in 2025?
Netflix’s double-digit progress continues
Although macro uncertainty guidelines the financial narrative today, Netflix stays in strong form. By way of the primary six months of 2025, the corporate’s income totaled $21.6 billion, representing a 14.2% leap from the identical interval final yr. The management workforce raised steerage, because it now sees gross sales coming in between $44.8 billion and $45.2 billion for the total yr.
As of Dec. 31, 2024, Netflix had 302 million subscribers. Administration stopped reporting quarterly subscriber numbers this yr. Nonetheless, new prospects are nonetheless a part of the story. “Yr-over-year income progress was primarily a perform of extra members, greater subscription pricing, and elevated advert income,” the Q2 2025 shareholder letter reads.
Trying forward, traders have causes to be optimistic. “We nonetheless received lots of of tens of millions of parents to enroll. And from a income perspective, we’re about 6% of shopper spend and advert income within the nations we serve within the areas that we serve,” co-CEO Greg Peters stated in the course of the Q1 2025 earnings name.
Development will undoubtedly gradual, however this commentary is encouraging. And in response to Wall Avenue consensus analyst estimates, income will improve at a compound annual fee of 13.1% between 2024 and 2027. It wouldn’t be shocking to see Netflix preserve posting double-digit income positive aspects.
Producing sturdy earnings
It has been exceptional watching Netflix’s journey to dominating the streaming panorama. The enterprise has actually proved the skeptics incorrect. These naysayers believed that Netflix would by no means be capable to report constant and rising earnings, primarily due to how a lot cash it was required to spend on content material yearly.
Netflix saved rising, including subscribers and income, and now has reached an enormous scale that has bolstered its earnings assertion. The corporate’s working margin went from 7.3% in 2014 to 26.7% in 2024. This highlights the good thing about having massive, mounted prices at a time when gross sales have expanded quickly. Netflix can preserve its highly effective aggressive place as a result of it has so many subscribers who usher in income and permit the corporate to maintain spending on content material and advertising efforts.
In 2025, the management workforce expects Netflix to supply $8 billion to $8.5 billion in free money circulation. That will symbolize a 19.6% year-over-year improve (on the midpoint). This underscores simply how profitable the enterprise mannequin has grow to be.
Right here’s what I believe traders ought to do
Netflix has crushed the market in 2025. And up to now 12 months, the inventory is up 86%. To be truthful, the corporate is reporting phenomenal monetary outcomes that spotlight simply how a lot demand there may be for the streaming platform. What’s extra, the earnings aren’t too shabby.
However I imagine Netflix shares have gotten forward of themselves. As of July 31, they commerce at a price-to-earnings (P/E) ratio of 49.4. This a number of alone has soared 147% simply up to now three years, because the market’s optimism in regards to the firm has grow to be strikingly clear.
For my part, the inventory is overvalued in the present day. Between now and 2030, I wouldn’t be shocked to see the P/E ratio contract. I don’t assume traders can purchase shares. In truth, the perfect factor is perhaps to take some earnings off the desk. However should you stay bullish, take into account holding.
