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Netflix (NFLX +5%) caught a nice tailwind today after the WSJ reported that the streaming giant was looking to reach $1 trillion in market cap, an over 100% jump from its current standing, and double its FY24 revenue of $39 bln by 2030. NFLX has been holding its ground despite tariff-related uncertainty lately, fully recovering from a roughly 8% sell-off following the Trump administration's policy announcement on April 3. It helps that the company is mostly cushioned from the trade policy effects, only dealing with a potential drop in consumer confidence and a subsequent pullback in spending due to tariff uncertainty.

• NFLX has proven that its steady stream of new content creates a competitive edge by maintaining and growing its user base. Despite many new entrants since NFLX first launched streaming service nearly 20 years ago, its user base has expanded consistently over the years, ending FY24 with over 300 million subscribers, a 30% jump from FY22 levels.
• Users have stuck with NFLX even as its prices hike and password sharing is eliminated. Monthly prices for NFLX's Standard plan have crept higher since starting at $7.99 in 2011, currently priced at $17.99. Meanwhile, NFLX introduced additional tiers, with its ad-supported service costing the initial Standard price and the Premium plan, which includes high definition, better audio, and other features, costing $24.99. NFLX has been tactical in its price hikes by accompanying them with additional tiers, creating a powerful revenue tailwind in the process.
• The ad-supported tier and untapped potential overseas will be critical components of reaching $1 trillion in market cap. Since launching in November 2022, NFLX's ad-supported tier already boasts 70 mln subs globally. By offering a relatively low entry-level price, NFLX increases its total addressable market. It appeals to consumers who may have never considered spending over $200 annually on the service, finding more than half that cost more palatable.
  • Similarly, there is ample opportunity outside the U.S., especially as NFLX creates content catered to these markets. NFLX has reportedly told its staff that India and Brazil are key markets that are ripe for increasing penetration.
• Live remains a crucial growth category for NFLX. The company avoided bidding on live sports throughout its history, as this endeavor can get pricey. However, recently, NFLX has started to build out its live offering in the U.S. Management has repeatedly stated that it is not a sports strategy but a live event strategy, broadening its focus outside of just sports to deliver more entertainment value as it can pinpoint certain events to host on its platform, such as the Tom Brady Roast, the Paul-Tyson fight, and the NFL on Christmas Day.

NFLX's $1 trillion market cap goal is ambitious but achievable. While volatility could arise over the near term, given the uneasiness surrounding trade policy and some calls for a recession, NFLX is starting from a leadership position, boasting more subscribers than its competitors. The company also touts many items in the works that can help push it past its goals within the next five years.