- Executives aiming for $80 billion revenue by 2030
- Stock would need to rally to $2,335 to hit $1 trillion market cap
- Revenue and op profit targets at 7%/9% premium to consensus
Executives at Netflix (NFLX:NASDAQ) have set a target for the streaming giant to achieve a $1 trillion market valuation by 2030, according to reports.
The Wall Street Journal has stated that a recent internal strategy meeting saw Netflix leaders share their vision to double the company’s revenue and triple its operating income by the end of the decade, citing people who attended the meeting.
Ambitious targets for the next five years call for annual revenue of $80 billion, ad revenue of $9 billion, and $30 billion of total operating profit.
In 2024 (to end December), Netflix reported annual revenue of $39 billion, up 16% on 2023. Based on data from Statista and media publication Campaign, global ad revenue last year doubled to approximately $2.12 billion, and is set to double again in 2025.
Full year 2024 operating profit was $10.4 billion, on a rough 27% operating margin.
RAMPANT Q4 2024 GROWTH
The platform experienced substantial growth in the fourth quarter of 2024, adding 18.9 million subscribers worldwide, bringing the total number of Netflix users to 301.6 million.
The company’s executives are now aiming to increase this subscriber base to approximately 410 million by 2030, focusing on international markets, such as India and Brazil, for much of this expansion.
The company’s ad-supported tier, launched in late 2022, is gaining traction, accounting for 43% of February sign-ups according to Antenna, up from 40% in January. To scale its advertising business further, Netflix is replacing Microsoft’s ad tech with an in-house solution set to roll out this month.
COMPARING EXISTING TARGETS
Forecasting corporate financial performance over the next 12 to 24 months is tough enough, so investors should treat estimates out to 2030 cautiously, but analysts have run the calculations.
Based on Koyfin consensus data, analysts are currently estimating revenue of $75 billion for 2030, and operating profit of around $27.5 billion. This puts Netflix’ new targets approximately 7% and 9% above consensus.
If we assume, say, a 10% premium to current 2030 EPS (earnings per share) estimates of $58.50, it will imply about $64 per share.
Netflix’ next 12-months PE (price to earnings) multiple has swung wildly over the past 18-months, ranging from 25 to 42. Stockopedia puts the currently rolling 12-months PE at 35.4. Running some simple back-of-notebook calculations, applying the same PE to our rough EPS projection of $64, would put the Netflix share price at roughly $2,265, for a market cap of $967 billion, just shy of management’s $1 trillion 2030 target.
According to our calculations, Netflix stock would need to rally from the current $931 to $2,335 (approximately) to hit the $1 trillion goal, or a 2030 PE of around 37.
