The $1T Media Company
Jessica Toonkel & Suzanne Vranica
Sort of wild that Toonkel and Vranica scooped this – I feel like you don't see a ton of internal Netflix leaks, perhaps because of their unique corporate culture, where people not fully bought in tend to leave (and get paid to do so!). And whatever they got leaked here is chock full of very specific numbers:
Netflix aims to achieve a $1 trillion market capitalization and double its revenue by 2030, ambitious goals that show its growing heft as the largest global streamer.
Executives were optimistic about the company’s growth prospects at the streamer’s annual business review meeting last month, despite growing concerns on Wall Street about the economy and trade-policy uncertainty. They shared with senior staff ambitious goals for revenue, ad sales and operating income by 2030, according to the people who attended the meeting.
Netflix is currently worth just over $420B (cue cringe Elon joke), and that's with the stock up over 15% in just the past week thanks to the Trump Tariff swings. To hit $1T, the company would have to more than double in terms of market cap in the next five years. To be fair, they have done that over the past five years, as in 2020, their market cap was around $190B. But as the numbers get bigger, it's supposed to be harder to grow at the same rate.
Also, they've been on one hell of a run after the post-COVID collapse the stock – like so many pandemic boom stocks – suffered. At the end of 2021, Netflix's market cap was $275B. A few months later, it was $85B.1 The stock is now up almost exactly 5x from that low point.
It's just an incredible company – now well over 2x the market cap of Disney. Though long-time readers of mine shouldn't be surprised. Eight years ago, I wrote about the public companies I thought were poised to be massive winners over the next few years: Amazon and Netflix (with my wildcard, Tesla). All three did indeed soar, with Netflix growing from a $60B company to where it is today: 7x.
But beyond the high-level target valuation number, we have some other specifics as to how Netflix thinks they'll get to become the next $1T company:
Netflix, home to shows such as “Adolescence” and “Black Mirror,” aims to double revenue from $39 billion last year and earn about $9 billion in global ad sales by 2030, according to people who attended the meeting. Netflix doesn’t disclose its ad revenue, but research firm eMarketer estimates that U.S. ad revenues for the streaming giant will top $2.15 billion this year.
Executives also have a goal of tripling Netflix’s operating income by 2030 from $10 billion last year, according to one of the people.
Remember when there were questions as to whether Netflix would ever be profitable? You don't hear those too much these days...
The company, which had 301.63 million global subscribers at the end of last year, wants to end 2030 with around 410 million, that person said.
The problem there is that they're simply running out of households not already signed up – certainly in the US. And so, the focus will be elsewhere:
Netflix executives have told staff they plan to focus on increasing subscribers overseas, particularly in markets with high broadband penetration such as India and Brazil, some of the people said.
Of course, international growth has long been the key for Netflix. But the US has continued to surprise on the upside, both because of subscribers (thanks in part due to password sharing crackdowns), but also because of the move into ads.
The company’s ad-supported tier, which launched in November 2022, started off slow but has gained momentum lately. Some 43% of U.S. customer sign-ups in February were for the ad-supported tier, compared with 40% in January, according to subscription research firm Antenna.
Although Netflix’s ad business is still in its infancy, MoffettNathanson analyst Robert Fishman said recently in a note to investors that it is “starting to gain scale,” which should unlock a new runway of growth in the business. Netflix is expected to largely replace Microsoft, its initial partner, with its own ad tech in the U.S. this month.
These are the numbers that highlight exactly why Apple is going to go down this path eventually too. You and I may not like ads – and certainly, Netflix built their entire business as being against them – but they work when it comes to scale. Which Netflix is now clearly at. Yes, even with some crap content. Choice and abundance rule the day.
I still think Netflix will need another trick or two up their sleeve to get to $1T – but we can already sort of see those cards with live sports (and other events) and, eventually, leveraging the theatrical model to supercharge their marketing. Gaming had been their big side bet – which I was skeptical of – and it has seemingly been a mixed bag, at best. But I'm also confident that they remain ahead enough of the curve to keep running laps around the entire business for some time.
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 In one of the worst trades in recent memory, Bill Ackman famously bought up $1B in shares close to that peak and then dumped the shares a few months later as they plummeted, losing nearly half of his capital in the process. His position would have been worth over $3B today.