Fearless of tariff turmoil! Netflix stock price "soars," Barron's continues to be bullish

Zhitong
2025.05.19 02:57
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Barron's recently has a positive outlook on Netflix, giving it a "Buy" rating despite a challenging outlook for U.S. stocks in 2025. Netflix's stock price has risen 25% since April, outperforming the S&P 500 by 4%. The company is not affected by tariffs, with strong user growth, currently boasting 300 million subscribers and a market capitalization close to $500 billion. Although the price-to-earnings ratio is as high as 43 times, analysts believe its long-term growth potential is reasonable. Netflix is also expanding into new businesses, including ad-supported subscriptions and themed restaurants, with EBITDA expected to continue growing

According to the Zhitong Finance APP, Barron's recently stated that despite a challenging performance for U.S. stocks in 2025, Netflix (NFLX.US) stands out and still deserves a "buy" rating.

Since April of this year, the stock price of this streaming giant has surged by 25%, exceeding the S&P 500 index's increase of 4%, despite renewed volatility due to U.S.-China trade tensions.

What is the reason? Netflix is largely unaffected by tariffs. Barron's believes that the company does not import physical goods, and even the U.S. government's threat to impose high tariffs on foreign films would not have a significant impact, as the company can shift production to the U.S. or adjust pricing.

Strong Performance

Investors also believe that Netflix performs robustly during uncertain times. During the pandemic, content drove strong user growth for Netflix. Currently, Netflix has over 300 million subscribers and a market capitalization close to $500 billion, with a goal of reaching $1 trillion by 2030.

Nevertheless, the stock is still not cheap, with a projected price-to-earnings ratio of 43 times, compared to the S&P 500 index's projected price-to-earnings ratio of 21 times. However, supporters argue that Netflix's long-term growth potential justifies this premium. Barron's noted that Ben James from Baillie Gifford's U.S. Growth Fund Strategy mentioned a "flywheel" model: more users drive more content investment, which in turn attracts more users.

Netflix's profit margin has climbed from 4.5% in 2015 to the current 27%, and it could double by the end of this decade. New revenue sources are also providing a boost. Netflix launched its ad-supported subscription service at the end of 2022, currently boasting 24 million users, with advertising revenue continuously growing. Artificial intelligence and live sports events could further enhance Netflix's growth momentum.

Business Diversification

Netflix is even expanding its business beyond streaming, with themed restaurants and immersive experience venues set to open soon. Analysts expect the company's EBITDA to grow by 26% this year, with further growth anticipated by 2027.

Despite Netflix's recent surge, some believe there is still significant upside potential, especially if profits continue to grow

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