Netflix Inc (NFLX) shares have taken a dramatic leap, soaring by nearly 9% to $832 in November, marking a new all-time high. This surge comes amidst a broader market upswing following Donald Trump’s re-election, with investors anticipating a boost to consumer spending fueled by his pro-business, tax-cutting agenda. The expectation is that this economic stimulus could lead to increased discretionary spending, benefiting sectors like streaming services.
Adding to the positive momentum, Netflix recently achieved a significant milestone: its ad-supported streaming tier has now reached 70 million monthly active users just two years after its launch. This successful expansion demonstrates the growing appeal of ad-supported options, a key strategy for Netflix to attract a broader audience and increase revenue streams.
The potential benefits of Trump’s policies for Netflix extend beyond the domestic market. The proposed extension of the 2017 Tax Cuts and Jobs Act, coupled with further reductions in individual and corporate taxes, could leave more disposable income in consumers’ pockets, boosting demand for subscription services like Netflix. Additionally, Trump’s deregulation plans might help lower content acquisition and production costs in the U.S., allowing Netflix to allocate more resources to its original content portfolio.
Furthermore, a strengthened U.S. dollar, a likely outcome of Trump’s anticipated economic policies, could potentially reduce costs for Netflix when producing content internationally. This is crucial for a company heavily invested in foreign-language programming to expand its global market share.
In essence, Netflix investors appear to be betting on a Trump administration’s focus on economic growth and consumer spending to create a favorable environment for the company’s continued growth and profitability.
Wall Street analysts generally view Netflix as an “Outperform” stock, considering its track record over the past three months. Laurent Yoon from Bernstein, one of the most bullish analysts, expects a 24.8% increase in the stock price over the coming year. Looking at the stock’s recent performance, Netflix has climbed 23.29% in the past three months, suggesting investor confidence in the company’s future. This upward trajectory is further supported by its robust revenue growth of 15.02% over the past year.
The combination of strong fundamentals, positive market sentiment, and the potential for further growth under a Trump administration makes Netflix a compelling stock to watch in the coming months.
