Netflix Stock Is Crushing the "Magnificent Seven" in 2025. Is It a Buy?

Core Viewpoint - Netflix has shown strong performance during the pandemic and continues to outperform major indexes, with a year-to-date stock increase of 9% [1] Group 1: Market Performance - Netflix is outperforming the "Magnificent Seven" growth stocks, which have all seen double-digit declines this year due to recession fears [2] - The stock trades at a premium valuation of 45 times earnings, raising questions about future growth potential with over 300 million subscribers [4] Group 2: Financial Performance - First-quarter revenue grew by 12.5% year over year, reaching $10.5 billion, with management optimistic about ad-supported plans potentially doubling ad revenue by 2025 [5] - The company reported a strong operating margin of 31.7$17 billion on content last year, which is a key strategy for membership growth [8] Group 4: Long-term Outlook - Management sees potential for hundreds of millions of new members, as Netflix has a relatively small share of TV hours watched [10] - Analysts project an annualized earnings growth rate of 24%, with the stock trading at 27 times earnings based on 2027 estimates, indicating a more reasonable valuation [9] Group 5: Competitive Position - Netflix is viewed as having a resilient business model compared to other tech companies, with potential for market-beating returns for long-term investors [11]