Netflix has had an impressive run. With its shares climbing over 30% year-to-date and currently trading at a price-to-earnings (P/E) ratio in the mid-40s, investors are increasingly asking whether there’s room left for growth—or if the current valuation has already priced in the streaming giant’s future.
At its core, Netflix’s bull case still hinges on global subscriber growth, pricing power, margin expansion, and content efficiency. Its recent crackdown on password sharing, which was once viewed as a risky move, has surprisingly turned into a tailwind, helping to add millions of new subscribers. That surge suggests there’s still meaningful untapped demand among non-paying users—a cohort Netflix is now converting into revenue-generating customers. Its advertising-supported tier also introduces a new monetization avenue, appealing to price-sensitive audiences while opening up a brand-new revenue stream through targeted ads.
Operationally, Netflix has become more disciplined. Content spending is increasingly ROI-driven, with a shift away from high-risk, high-cost productions and toward franchises, localized content, and series with strong global crossover potential. This improves the company’s free cash flow generation—something that markets reward more aggressively than they did five years ago.
Yet, valuation is undeniably rich. At a forward P/E in the 40s and enterprise value to EBITDA in the low 20s, Netflix is priced as a growth company, not a mature cash cow. For the stock to continue rising from here, either earnings need to grow at a sustained double-digit rate, or sentiment must remain bullish enough to keep multiple expansion alive. The former is plausible but not guaranteed—competition from Disney+, Prime Video, and YouTube continues to nibble at market share. And globally, saturation is a real threat in developed markets, meaning future growth increasingly depends on emerging economies, where ARPU (average revenue per user) is lower.
That said, there are still tailwinds. If Netflix can make its ad business meaningful—say, 10-15% of total revenue over the next three years—it will effectively unlock a second business model atop its subscription base. Similarly, if AI can meaningfully reduce production costs or enhance recommendation algorithms, Netflix could squeeze out more margin. Partnerships with telcos, hardware bundling, and sports or live event ventures are other levers the company hasn’t fully pulled.
So, is there room to grow? Yes, but it requires near-flawless execution. At this valuation, Netflix needs to deliver not just growth, but high-quality, margin-boosting, defensible growth. The market’s expectations are no longer low. The path ahead is narrower, but not closed. Whether the stock keeps rising from here may ultimately come down to how compelling Netflix can make its next act.