Netflix Stock Surges on Strong Q4 2023 Results

Netflix stock is experiencing a significant surge following the release of its impressive Q4 2023 financial results. The stock has jumped over 12% to $552.63, reaching its highest level in two years. Based on the company’s robust free cash flow (FCF) projections for the next 12 months, experts believe that Netflix stock could be worth even more, as high as $625 or more.

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In recent articles, financial analyst Mark R. Hake, CFA, highlighted the substantial FCF figures of Netflix. The company reported $6.925 billion in FCF during 2023, equivalent to 20.5% of its total revenue of $33.725 billion. This FCF is projected to increase even further in the coming year, as Netflix expects its revenue to rise 4% sequentially in Q1 2024, potentially reaching $42.60 billion by 2025.

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Analysts estimate that Netflix’s FCF could reach $8.21 billion, assuming a 20.5% margin and steady growth in revenue. This estimation has significant implications for NFLX stock. Using a 3.0% FCF yield metric, the stock could potentially rise to $625.08 per share, an increase of 27% from its previous day’s closing price of $492.19. Moreover, this estimate aligns with the existing FCF yield of 3.2%, indicating the potential for a higher price target.

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The company’s robust FCF is driven by several factors, including the growth in new memberships previously shared and exponential ad revenue. These developments reduce acquisition costs and increase FCF. As a result, analysts are likely to increase their price targets for NFLX stock in the upcoming week, potentially surpassing the previous average of $625.08.

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This strong FCF performance indicates the potential for significantly higher value for NFLX stock, suggesting a bright future for Netflix.