Netflix NFLX reported strong first-quarter 2025 results after the closing bell on Tuesday. The world’s largest video-streaming company outpaced earnings estimates but slightly missed revenue estimates. It offers an upbeat outlook for the ongoing quarter and several analysts raised the target price on the stock, signaling bullish trends. As such, shares of Netflix jumped as much as 4.5% in after-market hours.
Investors seeking to tap this opportune moment should invest in ETFs with the largest allocation to this streaming giant. These funds include MicroSectors FANG+ ETN FNGS, Invesco Next Gen Media and Gaming ETF GGME, First Trust Dow Jones Internet Index Fund FDN, FT Vest Dow Jones Internet & Target Income ETF FDND and Communication Services Select Sector SPDR Fund XLC.
The company reported earnings per share of $6.61, which strongly outpaced the Zacks Consensus Estimate of $5.69 and the year-ago earnings of $5.29. Revenues rose 13% year over year to $10.54 billion and were slightly below the consensus estimate of $10.55 billion. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Netflix no longer reports quarterly subscriber numbers, following its strategy of focusing on revenues and other financial metrics as performance indicators. The company remains unscathed by the ongoing tariff chaos as the entertainment industry shows its resilience in tough economic times. Netflix’s low-cost advertising-supported service plan should give it more resilience if the macroeconomic climate worsens.
For the second quarter, Netflix expects revenues to grow 15% year over year to $11.04 billion, while earnings per share are expected to rise 44% to $7.03. The guidance is above the Zacks Consensus Estimate of $10.96 billion for revenues and $6.22 for earnings per share.
The company launched its in-house ad tech platform on April 1, with international expansion beginning this quarter. Management expects advertising revenue growth to double in 2025, signaling confidence in this relatively new business segment. Netflix reaffirmed its full-year revenue guidance of $43.5-$44.5 billion.
Netflix aims to reach a market capitalization of $1 trillion by the end of the decade, a significant leap from its current valuation of approximately $419.2 billion. The company plans to double its annual revenues from $39 billion to $80 billion, fueled by its burgeoning ad-supported subscription model and international market expansion. Netflix also forecasts its global advertising revenues to grow to $9 billion by 2030.
Netflix’s growth strategy includes expanding its content library, developing live programming options, enhancing its gaming division and building its advertising business.
With total subscribers of more than 300 million, the company aims to increase this subscriber base to approximately 410 million by 2030 by focusing on international markets, such as India and Brazil, for much of this expansion.
Several analysts praised the company’s ability to thrive amid economic uncertainty. Following the first-quarter earnings announcements, analysts responded positively to Netflix’s results. Guggenheim raised the target price on the stock from $1,100 to $1,150, citing “solid” first-quarter results and seeing a “long runway for growth.” BMO Capital increased the target price to $1,200, highlighting the “multi-year durable ad growth opportunity” ahead (read: Bulls Chasing Netflix Ahead of Q1 Earnings: ETFs in Focus).
MoffettNathanson raised the price target to $1,150 from $1,100 while Oppenheimer increased it to $1,200 from $1,150. Pivotal Research raised the price target to $1,350 from $1,250.
Even cautious analysts like Barclays lifted the target price on Netflix to $1,000, noting that the streaming giant has become a “defensive long” investment in the current economic environment.
An analyst at Bank of America said Netflix has “sustainable growth drivers” that could make it a strong defensive choice in a tougher macroeconomic environment. Jefferies analysts said Netflix remains a “top pick” as the company rolls out its ad suite.
MicroSectors FANG+ ETN (FNGS)
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar-weighted index. It is designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in its basket in equal proportion, with Netflix’s share coming in at 10% (read: Should You Brace for Mag-7 ETFs Before It’s Too Late?).
MicroSectors FANG+ ETN has accumulated $363.5 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 137,000 shares a day on average and has a Zacks ETF Rank #3.
Invesco Next Gen Media and Gaming ETF (GGME)
Invesco Next Gen Media and Gaming ETF offers exposure to companies with significant exposure to technologies or products that contribute to future media through direct revenues. It tracks the STOXX World AC NexGen Media Index, holding 85 stocks in its basket. Netflix is the top firm, accounting for 9.2% of the GGME assets.
Invesco Next Gen Media and Gaming ETF has amassed $115.6 million in its asset base and charges 61 bps in annual fees. It trades in an average daily volume of 16,000 shares and has a Zacks ETF Rank #3.
First Trust Dow Jones Internet Index Fund (FDN)
First Trust Dow Jones Internet Index Fund follows the Dow Jones Internet Composite Index, giving investors exposure to the broad Internet industry. It holds about 41 stocks in its basket, with Netflix occupying the top spot at 10.1%.
First Trust Dow Jones Internet Index Fund is the most popular and liquid ETF in the broad technology space, with AUM of $5.7 billion and an average daily volume of around 503,000 shares. FDN charges 51 bps in fees per year and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.
FT Vest Dow Jones Internet & Target Income ETF (FDND)
FT Vest Dow Jones Internet & Target Income ETF is an actively managed fund that invests primarily in U.S. exchange-traded equity securities intended to track the Dow Jones Internet Composite Index. It utilizes an “option strategy” consisting of writing (selling) U.S. exchange-traded call options on the Nasdaq-100 Index or ETFs that track the Nasdaq-100 Index. It holds 42 stocks in its basket, with Netflix occupying the top position at 10.1% share.
FT Vest Dow Jones Internet & Target Income ETF has accumulated $5.8 million in its asset base and trades in an average daily volume of about 6,000 shares. It charges 75 bps in annual fees.
Communication Services Select Sector SPDR Fund (XLC)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services and has accumulated $18.9 billion in its asset base. It follows the Communication Services Select Sector Index and holds 23 stocks in its basket, with Netflix occupying the fourth position at 6.9% share. About 31.5% of the portfolio is allocated to entertainment and interactive media & services each, while media round off the next spot with a 23% share (read: Inside Trump Tariffs and Their Impact on Sector ETFs).
Communication Services Select Sector SPDR Fund charges 8 bps in annual fees and trades in an average daily volume of 7.1 million shares. It has a Zacks ETF Rank #1.
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Netflix, Inc. (NFLX) : Free Stock Analysis Report
First Trust Dow Jones Internet ETF (FDN): ETF Research Reports
Communication Services Select Sector SPDR ETF (XLC): ETF Research Reports
MicroSectors FANG+ ETN (FNGS): ETF Research Reports
Invesco Next Gen Media and Gaming ETF (GGME): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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