Investors will need to see Netflix's market cap expand by 192% annualized over the next four years.
However, the streaming stock's current valuation and lower growth prospects are notable headwinds.
Netflix (NASDAQ: NFLX) shares might be 39% off their record right now (as of June 4), but investors can't argue with its long-term performance. The streaming stock has rocketed 719% higher in the past decade. Today, the company's market capitalization sits at a sizable $343 billion.
But could this become a trillion-dollar stock by 2030?
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Netflix's market cap will need to expand by 192% over the next four years to reach the 13-figure club, which currently has only 15 members in it. This translates to a robust 30.7% annualized growth rate.
As a reference, over the past four years, Netflix's valuation has risen by 289%. However, this comparison might be skewed since the stock tanked in 2022 due to subscriber losses, so it was starting from a low base.
It doesn't seem likely that Netflix will be able to reach a trillion-dollar market cap by 2030. For starters, its valuation isn't cheap, so there is a low probability that the multiple can introduce meaningful upside. The stock trades at a price-to-earnings ratio of 26.3.
Additionally, the company's growth is slowing. Management expects Netflix to report $51.2 billion in revenue in 2026 (at the midpoint), which would be up 13.3% year over year.
Long gone are the days of greater than 20% annualized top-line gains. This isn't exactly a surprising revelation. Netflix is more mature than it was in its earlier years. And competition for attention is fierce.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.