Netflix (NDQ:NFLX): It Reaches Over 1bn People But Still Claims Its Just Getting Started

Netflix (NDQ:NFLX) has become one of the most recognisable companies in global media, a business that reshaped how people consume entertainment and forced an entire industry (the media and entertainment) to re‑engineer itself. Yet the question now confronting investors is deceptively simple: can its growth continue? The company delivered US$45.2bn revenue last year, up from US$39bn the year before, while its profit reached US$11bn, rising from US$8.7bn in 2024 and US$5.4bn in 2023. The trajectory is steep, the margins are expanding, and the subscriber base is broadening.

But the competitive landscape is shifting, content economics are evolving, and the company’s own ambitions (to effectively reach another billion people on top of the billion it already reaches) require a scale that no media business has ever achieved.

To understand whether Netflix can sustain its momentum, it helps to start with the story of how it got here.

Netflix (NDQ:NFLX): It invented the future rather than predicted it

Netflix’s origins are folklore beginning in 1997 as a DVD‑by‑mail service. Its early value proposition was that it was convenient given there were no late fees, no store visits, nor any other kind of friction. The model was simple but elegant, and it grew steadily as consumers embraced online ordering.

The pivotal moment came in the early 2000s when Netflix introduced its subscription model. Instead of paying per rental, customers paid a flat monthly fee for unlimited discs. This shift created recurring revenue, predictable cash flow and a customer relationship that was fundamentally different from traditional video rental. It also laid the foundation for the company’s next reinvention.

In 2007, Netflix launched streaming. At the time, the idea seemed speculative. Internet speeds were inconsistent, content libraries were thin, and the economics were untested. But Netflix recognised something the rest of the industry did not. Namely that streaming was the future of entertainment. The company invested aggressively, built infrastructure, secured rights and gradually shifted its business away from discs.

The irony is that Netflix could have been acquired by Blockbuster. In 2000, Hastings offered to sell the company for US$50m. Blockbuster had it on a silver platter but declined. Within a decade, Blockbuster was bankrupt and Netflix was on its way to becoming one of the most valuable media companies in the world.

Netflix’s mission today (“to entertain the world” ) reflects the scale of its ambition. Its advantages are taught in every business school: a subscription model that generates recurring revenue; a vast library of titles that keep members returning; a recommendation engine that personalises viewing; and a global distribution footprint that allows content to scale across markets.

The company’s rise has been driven by its ability to reinvent itself. The question now is whether it can continue to reinvent the industry.

2025 was another good year and 2026 set to be another. But…

Netflix’s most recent year was one of its strongest. Revenue reached US$45.2bn, up from US$39bn the year before. Net income rose to US$11bn, compared with US$8.7bn in 2024 and US$5.4bn in 2023. Operating margins expanded, subscriber engagement increased, and the company’s advertising tier gained traction.

For 2026, Netflix is calling for US$50.7–51.7bn revenue — growth of 12–14% — and an operating margin of 31.5%. These are robust numbers for a company of its size. They reflect both subscriber growth and improving unit economics, particularly in content amortisation and advertising monetisation.

The company’s 2025 investor letter articulated its long‑term vision with unusual clarity. Netflix argued that it is entertaining one billion people, yet it accounts for only 5% of global TV view share. It also estimates that it has penetrated only 45% of its total addressable market. The implication is that the runway is long, the market is under‑penetrated, and the company’s global footprint gives it structural advantages. True. But…

…the headwinds are real

Now that is not to say Netflix will be swamped by them, just that headwinds do exist. Competition is intensifying, not just from traditional rivals like Disney+, Amazon Prime Video, Apple TV+ and HBO Max, but from the broader ecosystem of content deals, sports rights, live entertainment and bundled offerings. Major content deals are being done across the industry (from sports streaming partnerships to exclusive franchise acquisitions) and these deals shape consumer behaviour. Netflix’s strategy of focusing on owned IP and global originals gives it resilience, but it does not eliminate competitive pressure.

The economics of content are also shifting. Production costs are rising, talent deals are becoming more expensive, and the industry is still adjusting to the post‑strike environment. Netflix’s scale allows it to amortise content over a global subscriber base, but it must continue to deliver hits that resonate across markets.

The company’s advantage is that it has built a system capable of producing global franchises (from Stranger Things to Squid Game) but the challenge is sustaining that output. And of course (unlike social media platforms) they have to pay for outputs. Yes, when you post on social media you are effectively working for those platforms for free – that is exactly what we are implying. If Netflix had no production costs as social media platforms had…it’d be recording even higher profits.

Netflix’s ad‑supported tier has been known for sometime and was clearly a move aimed at growing its user base to a cohort that either wouldn’t have consumer or would’ve wondered if they could still afford it when they got their latest electricity bill. While the tier is established, the economics are still evolving and its a fine tightrope to walk. The company must balance user experience with monetisation, and it must compete with platforms that have decades of advertising infrastructure.

The final headwind is saturation. While Netflix argues it has penetrated only 45% of its TAM, the reality is that growth in mature markets is slowing. The company must rely increasingly on emerging markets, where ARPU is lower and infrastructure challenges remain.

Netflix’s results last year were exceptional. But sustaining growth requires navigating a landscape that is becoming more complex, more competitive and more expensive.

Consensus estimates and the valuation question

Consensus estimates for Netflix over the next several years paint a picture of continued growth, expanding margins and rising profitability. The company is expected to deliver US$51.3bn in 2026 which would be midpoint of guidance. Then in 2027 $63.3bn, in 2028 $69.1bn and in 2029 US$74.9bn.

EBITDA is forecast to rise from US$17.1bn in 2026 to US$21.2bn in 2029. And its is expected to grow from US$3.59 in 2026 to US$6.16 in 2029. Translating EPS into net income provides a clearer picture of profitability. This means US$11bn in 2026, then US$14.1bn in 2027, US$16.9bn in 2028 and US$18.8bn in 2029.

These numbers suggest a company that is not only growing revenue but expanding profitability at a rate that outpaces top‑line growth. The margin expansion is driven by scale, content amortisation efficiency, advertising monetisation and operating leverage.

The valuation reflects this trajectory. Netflix’s 2027 multiples are 20.2× P/E and just 0.97x PEG. A PEG ratio below 1.0 implies that the company’s growth rate exceeds its valuation multiple — a rare combination for any US stock, let alone a global media leader like Netflix. As for the P/E of 20.2×, we wouldn’t say that is cheap, but we would say it is reasonable for a company with double‑digit revenue growth, rising margins and expanding profitability.

The question is whether these estimates are achievable.

The bullish case is that things will keep rocking forever. We know that Netflix has scale, brand, global reach, a proven content engine and a subscription model that generates recurring revenue. It is expanding into advertising, gaming and live entertainment. It has pricing power, strong engagement and a global distribution footprint that competitors cannot easily replicate.

The bearish case is equally clear. Competition is intensifying, content costs are rising, and the industry is fragmenting. Growth in mature markets is slowing, and emerging markets have lower ARPU. Advertising is promising but unproven at scale. And the company’s ambition — entertaining one billion people — requires navigating cultural, regulatory and economic differences across dozens of markets.

Netflix’s future will be determined by its ability to continue producing content that resonates globally, monetise its platform more effectively and expand into new verticals without diluting its core value proposition.

Conclusion — Can growth continue?

Netflix has defied expectations for more than two decades. It reinvented itself from a DVD‑by‑mail service into a global streaming leader. It survived competition from companies with far deeper pockets. It built a content engine capable of producing global franchises. And it delivered financial results that few media companies have ever matched.

The company’s growth can continue but it is not guaranteed. It will require navigating competitive pressure, managing content economics, expanding into new markets and executing on advertising. Whether it can achieve that mission depends on its ability to continue doing what it has always done: reinvent itself before the industry forces it to.