Content streaming provider Netflix (NASDAQ:NFLX) is a FAANG member but not one of the “Magnificent Seven” technology companies of 2023. This doesn’t mean Netflix has lost its glory, though. NFLX stock has a real chance at revisiting its 2021 peak price and then moving even higher from there.
Like other entertainment content providers, Netflix has had to deal with writers’ strikes and inflation, among other pressures this year. Yet, recently released data shows that Netflix has prevailed and offered outstanding value to the company’s shareholders. So, investors should still consider Netflix a FAANG favorite, even if some people wouldn’t call the company “magnificent.”
What Could Catalyze NFLX Stock to $700 in 2024?
If any factor could galvanize NFLX stock back to its $700-ish 2021 peak next year, it would be Netflix’s subscriber growth. Sure, Netflix has a number of big-money competitors in the streaming space, but the numbers demonstrate Netflix’s resilience during these challenging times.
In 2021, it was the broader market’s rising tide that lifted all tech-stock boats. This time around, Netflix doesn’t need any rising tide to lift the company. During 2023’s third quarter, Netflix added a whopping 8.76 million customers. With that, the company raised its total subscriber count to 247.2 million.
Not only that, but Netflix’s profit margins are improving. Previously, Netflix had guided for a full-year 2023 operating profit margin range of 18% to 20%. Now, the company is simply and confidently guiding for 2023 operating profit margin of 20%. Also, Netflix anticipates 2024 operating margins of 22% to 23%.
Furthermore, Netflix is clearly self-assured in its ability to maintain a loyal customer base. The evidence of this is Netflix’s recent price increases. Specifically, Netflix is raising its U.S. monthly prices for the company’s Basic plan from $9.99 to $11.99, and its Premium plan from $19.99 to $22.99.
Netflix Demonstrates Success With Its Ad-Supported Tier
Around a year ago, Netflix took a risk by introducing a cheaper, advertisement-supported subscription tier. Recently, the company’s risky move is turning out to be a huge successs.
Believe it or not, Netflix’s ad-supported tier has reached 15 million monthly active users (MAUs) globally. That’s a giant leap compared to 5 million MAUs in May.
Now, Netflix is taking another risk. Specifically, Netflix will reward ad-supported-plan “binge watchers” by showing fewer ads to them. If they watch three consecutive program episodes with ads, they’ll then get to view one ad-free episode.
Could this idea backfire? After all, it could result in Netflix generating less ad revenue. On the other hand, it might also encourage “binge watching” and keep viewers on the platform longer. Ultimately, only time will tell how successful Netflix’s new concept turns out to be.
NFLX Stock: New All-Time Highs Are Inevitable
I’m obviously bullish, but I don’t recommend “binge buying” of Netflix shares. Even though Netflix is growing its subscriber base and profit margins, investors should remain disciplined.
So, consider a moderately sized share position in NFLX stock with a 2024 price target of $700. If the stock gets there and keeps moving higher, the sky is the limit and you’ll be glad that you made a smart investment in Netflix.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
