What if Netflix Becomes the Next Trillion-Dollar Stock?
Key Points
Netflix's profits continue to rise at a strong pace, which can drive up the company’s valuation.
Shares aren’t trading at a bargain valuation, so this variable could be a headwind.
Reaching the trillion-dollar milestone seems inevitable, but it might take longer than the bulls are hoping for.
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It's impossible to argue that Netflix (NASDAQ: NFLX) isn't one of the most disruptive companies of the century. It created the streaming video category, resulting in monster success. Shares have soared 26,440% in the past two decades (as of March 16).
Today, Netflix holds a market cap of about $400 billion. What if the streaming pioneer becomes the next trillion-dollar stock?
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The math says it's possible
Currently, 12 companies carry a market cap of $1 trillion or more. This is clearly an illustrious group to be a part of. The businesses on this list dominate their respective industries, a description fitting for Netflix as well.
Netflix's market cap would need to expand by 150% for it to reach the $1 trillion mark. The math says that hitting this milestone is possible. In the past 10 years, the market cap soared by 859%. Even factoring in a slowdown in the future, it can be a realistic outcome.
The company's financial performance has been stellar. Netflix's diluted earnings per share (EPS) increased at a compound annual rate of 36.5% between 2022 and 2025. The consensus view among Wall Street analysts is that this profit metric will grow at a yearly pace of 21.2% over the next three years.
It's difficult not to get excited about Netflix's growth. In 2025, it added 23 million net new subscribers, pushing revenue 16% higher. Ad sales are projected to double this year to $3 billion. And it's pushing into new areas, like live sports and events, gaming, video podcasts, and physical experiences.
Only time will tell
Given Netflix's long-term trajectory, I don't believe there are many market participants that believe this won't be a trillion-dollar stock one day. This is a quality business that continues to operate at a high level. However, the ultimate question centers on timing. No one has any idea when the business will join the 13-figure club.
Despite strong fundamentals, it's not unreasonable to believe that growth will eventually start to decelerate in the years ahead. Naturally, Netflix isn't staring at the same expansionary opportunities that it had when it was a smaller company.
What's more, the stock isn't a bargain. It trades at a price-to-earnings ratio of 37.7. After Netflix walked away from the Waner Bros. Discovery deal, the market quickly rewarded the business by driving the share price higher.
Netflix becoming a trillion-dollar stock is only a matter of time, although it could take longer than the bulls hope.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
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