One trillion is a mammoth figure, a behemoth of a number that defies comprehension. Imagine counting to a trillion, taking a second for each number; it would consume over 30,000 years of your life. The financial realm also holds the weight of this imposing figure. Several elite corporations have breached the mystical $1 trillion club, and others are poised to join. Will Netflix (NASDAQ: NFLX) ascend to this prestigious rank? Let’s delve deeper.
What Constitutes the Elite $1 Trillion Club and Its Members?
A company’s worth is gauged through its market capitalization – a metric arrived at by multiplying its stock price by its outstanding shares. For instance, if a company’s stock trades at $100 with 1 million shares in circulation, its market cap totals $100 million.
Presently, six American corporate juggernauts bear market caps surpassing $1 trillion: Microsoft, Apple, Nvidia, Alphabet, Amazon, and Meta Platforms. Moreover, there exist 25 other American companies valued between $200 billion and $1 trillion. These colossal entities are known as megacap stocks, with Netflix standing tall among them.
Analyzing Netflix’s Trillion-Dollar Ambitions by 2035
As it stands, Netflix commands a $280 billion market cap. Yet, this figure does not match its pinnacle. Netflix has been convalescing from the grand slump of 2021/22, which ushered a 76% plummet over six months owing to subscriber attrition concerns. Steadily though, since mid-2022, Netflix shares have surged, up by 246%, flirting with their all-time zenith of $691.
Notwithstanding, hitting a new zenith contrasts with attaining a $1 trillion market cap. To join the esteemed $1 trillion echelon, Netflix must quadruple its market cap in the next 10.5 years – a Herculean feat.
While it remains conceivable, the path is fraught with challenges. Envisage this: Netflix could conceivably burgeon at a compound annual growth rate (CAGR) of 13% over the ensuing 10.5 years, potentially breaching the $1 trillion valuation mark. This pace outstrips its performance over the past five years, though it remains an ambitious endeavor.
NFLX Market Cap data by YCharts
Over the past five years, Netflix’s market cap surged from $153 billion to $279 billion, boasting a 12.7% CAGR. If this growth trajectory endures over the subsequent 10.5 years, Netflix’s market cap could crest at $980 billion.
Is Netflix a Sound Investment at Present?
Irrespective of Netflix’s proposed march towards a $1 trillion valuation, a greater quandary confronts investors: Is the stock a viable long-hold contender?
Financially, Netflix is thriving. Revenue has ascended by roughly 15%, with earnings soaring 79% year-on-year. Furthermore, free cash flow per share – a pivotal financial gauge for stocks – has mushroomed tenfold over the past half-decade.
Of course, some reservations exist concerning the stock’s valuation. Netflix’s price-to-earnings ratio stands at 45x – significantly above the S&P 500 norm.
Nonetheless, for investors embracing long-term outlooks, Netflix merits contemplation. After all, down the road, there might be a trillion compelling motives for ownership.
Should You Invest $1,000 in Netflix Right Now?
Before jumping on the Netflix investment bandwagon, ponder this:
The Motley Fool Stock Advisor analyst crew recently identified what they deem the 10 best stocks for present investment opportunities – Netflix not included. These selected 10 stocks harbor the potential for monumental returns in the foreseeable future.
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