Buy and Hold Netflix to Enhance Your Portfolio Amid Ongoing Volatility

Core Viewpoint - Netflix Inc. has emerged as a defensive investment choice amid market volatility caused by tariffs, demonstrating strong financial performance in Q1 2025 with earnings exceeding expectations while revenue aligned with consensus estimates [1][2]. Financial Performance - In Q1 2025, Netflix reported earnings that surpassed the Zacks Consensus Estimate, while revenue was mostly in line with expectations [1]. - For Q2 2025, the Zacks Consensus Estimate anticipates revenues of $11.05 billion, reflecting a year-over-year increase of 15.6%, and earnings per share (EPS) of $6.96, indicating a 42.6% increase year-over-year [8]. - Positive earnings surprises have been consistent, with an average beat of 6.9% over the last four quarters [8]. Growth Projections - The Zacks Consensus Estimate for 2025 indicates a year-over-year increase of 13.9% in revenue and 27.3% in EPS [9]. - For 2026, the estimates reflect an upside of 11.6% for revenue and 20.3% for EPS [9]. Business Strategy and Innovations - Netflix launched its Ad Suite in the U.S. on April 1, 2025, with plans to expand internationally, which is expected to enhance subscriber growth and average revenue per user (ARPU) [10]. - The company is transitioning to its proprietary ad system, moving away from Microsoft as its ad-tech partner, and implementing strategies like ad-supported lower-price tiers and abolishing password sharing [11]. - Netflix employs artificial intelligence and machine learning to provide personalized content recommendations, enhancing user experience and service quality [12][13]. Market Position and Valuation - Despite market volatility, Netflix shares have increased by 17.8% year-to-date, contrasting with an 8.4% decline in the S&P 500 Index [14]. - The company boasts a long-term growth rate of 20.4%, significantly higher than the S&P 500's 12.6% [15]. - Netflix's return on equity (ROE) stands at 39.6%, compared to the S&P 500's 17% and the industry's 6.2%, with a net margin of 23.07% versus the S&P 500's 12.7% [15].