Netflix's Growth Is Staggering. But Are Shares Still Attractive?

Core Insights - Netflix's stock has significantly outperformed the market, rising over 38% year to date compared to the S&P 500's 7% return, driven by strong business growth and operating margin expansion [1] - The company reported a 15.9% year-over-year revenue increase in Q2, surpassing the 12.5% growth in Q1, with expectations for 17.3% growth in Q3 [3] - Earnings per share for Q2 reached $7.19, a 47% increase year-over-year, attributed to a substantial operating margin expansion from 27.2% to 34.1% [4] Revenue and Earnings Growth - Netflix's management has raised its full-year revenue outlook for 2025 to between $44.8 billion and $45.2 billion, up from a previous estimate of $43.5 billion to $44.5 billion [6] - The company anticipates an operating margin of 29.5% for the full year, an increase from 26.7% in the previous year, up from an earlier guidance of 29% [7] Advertising Business - The advertising sales segment, while still small, is expected to double this year and is currently tracking ahead of initial expectations [8] Stock Valuation - Netflix's stock is trading at a high price-to-earnings ratio of approximately 53, indicating a premium valuation [9] - Concerns exist regarding whether this premium is justified, with suggestions that potential investors may want to wait for a lower valuation opportunity [10] - The competitive landscape is intensifying with major tech companies entering the streaming market, which could impact Netflix's future performance [11]