Remember how the FAANG group of technology stocks captured Wall Street’s imagination a few years ago? The so-called “Magnificent Seven” replaced FAANG in 2023 and somehow, Netflix (NASDAQ:NFLX) got lost in the shuffle. Yet, NFLX stock has the potential to regain its superstar status and zoom higher in 2024.
Netflix has more competition in the streaming space than it did five or 10 years ago. Nevertheless, at least one analyst expects Netflix stock to gain substantial value in the next 12 months. So, don’t sleep on this streaming star, as Netflix is here to stay and will continue to lead the field.
Don’t Dismiss NFLX Stock’s ‘Magnificent’ Performance
When you do the math, you might come to the same conclusion that I did: Netflix is as “magnificent” as the “Magnificent Seven” companies. Remember, Netflix stock started 2023 below $300 and ended the year approaching $500.
The fourth-quarter data isn’t available yet, but Netflix beat Wall Street’s consensus EPS estimates in the first three quarters of 2023. In addition, Netflix’s total subscriber count is rising and the company appears to be having initial success with its recently introduced advertisement-supported subscription tier.
These facts make the critics’ harsh remarks irrelevant, at least from an investor’s point of view. Cultural critic Peter Biskind called Netflix’s streaming content “unwatchable,” but Fortune observed that Netflix “signed up almost 240 million subscribers” during the past decade.
Thus, plenty of people are watching Netflix’s supposedly “unwatchable” streaming content.
Netflix Gets It Right With Strategic Pricing Model
In a time of persistent inflation, price increases are an unfortunate necessity for many businesses. Netflix it certainly not an exception to this rule. However, while other streaming companies may have overcharged their customers, Netflix got it right with a smart pricing strategy.
That’s the gist of KeyBanc Capital Markets analyst Justin Patterson’s positive commentary on Netflix. Notably, Patterson reiterated his “overweight” rating on NFLX stock and lifted his price target on the shares from $510 to $525.
That’s an optimistic price target, but it’s justified as Netflix carefully adjusts its subscription prices. “Based on Netflix’s history,” Patterson contends, the company’s pricing story “goes smoothly when engagement metrics are improving (often due to product and content quality).”
Unlike Biskind, Patterson seems to imply that Netflix’s streaming content is of high quality, and the customers don’t mind paying higher prices for that content.
As Patterson sees it, Netflix has increased its prices at the right times and in the right amounts. “Over time, Netflix settled on a more consistent algorithm of raising price when it sees healthy viewership, baseline levels of churn, and more value on the platform,” he explained.
Smart Move: Buy Netflix Stock and Hold It in 2024
Netflix’s content is certainly watchable, and the numbers prove this. Netflix’s savvy pricing strategy should help the company bolster its top- and bottom-line results throughout 2024.
So, don’t spend the next year obsessing over the “Magnificent Seven.” That’s a 2023 story, and it’s already old news. The new year will belong to Netflix, and NFLX stock deserves a place in every investor’s portfolio right now.
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.
