Netflix Poised for Significant Rally as a Safe Haven Stock

Key Points

• After falling back from an all-time high of over $1,000, Netflix stock is poised for a significant rally.
• Analysts believe the company is well-positioned to weather a consumer under inflation pressure.
• Potential softening in ad revenue may be a short-term concern.

After cracking the $1,000 mark for the first time in February 2024, Netflix Inc. NASDAQ: NFLX stock dropped 18% before coming back 13% and trading at $976.72 as of the market close on March 27, 2025. That has the stock finding support near its 50-day simple moving average (SMA) as it sets up for what could be a significant rally.

In the last three years, Netflix has undertaken several initiatives that have changed its business. The first was the addition of an ad-supported “entry” tier. The other was a crackdown on password sharing. The history lesson is important because, in early 2022, NFLX stock was down 74% from its then-all-time high of around $680.

While the idea of buying the dip seems obvious in hindsight, it wasn’t that way back then. Consumers began to feel streaming fatigue, and the need to deliver original content created financial pressure.

Needless to say, it’s been a happy ending for Netflix shareholders. And since hitting a new all-time high in May 2024, NFLX stock hasn’t looked back. It’s outperforming consumer discretionary stocks as measured by the iShares U.S. Consumer Discretionary ETF NYSEARCA: IYC which is down 5.8% year-to-date. Here’s why more gains could be ahead.

Why Inflation-Weary Consumers Are Still Choosing Netflix

FBN Securities analyst Matthew Thornton believes that consumers may be feeling the pinch of inflation, but they won’t be canceling their Netflix subscription. The analyst believes Netflix is “well-suited to weather” the current economic challenges.

It’s obvious at this point that low- to middle-income consumers are cutting back on discretionary spending. Numerous surveys show that consumers lack confidence in their financial outlook. That makes Netflix a great entertainment value even as consumers may get more discerning about their streaming options. To support this belief, Thornton says the firm forecasts that Netflix will see its share of consumer TV spending increase from 13% in 2024 to 22% in 2034.

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No Tariff Troubles Here

Another bullish argument for Netflix stock is that it has no tariff concerns. The second quarter earnings season is just a few weeks away. Many analysts are sharpening their pencils in anticipation of lowering ratings and price targets as companies forecast the impact of the expected trade war on corporate earnings.

Many investors are looking for growth stocks that don’t come with tariff concerns, and that means Netflix. The company will have new original content, including new seasons of “Squid Game,” “Stranger Things,” and “Wednesday.” Plus, it’s hard to understate the potential impact of live sports. Netflix dipped its toe into this arena in 2024 with the Jake Paul vs. Mike Tyson fight, followed by NFL Football on Christmas Day.

The company is taking a surgical approach to growth in this area. To begin with, it’s not planning to enter bidding wars for regular-season sports packages for any of the major sports. However, it is still planning to acquire the rights to select sporting events. The company does have the rights to the FIFA Women’s World Cup in 2027 and 2031.

To put this into relevant numbers for investors, Thornton believes that Netflix will reward investors with revenue that will grow at a compound annual growth rate (CAGR) of 9% over the next 10 years.

Can Anything Slow Down NFLX Stock?

If there’s one area investors may want to watch in the short term, it would come in terms of ad revenue. When companies pull back, marketing and advertising budgets are often the first place to cut. That means it wouldn’t be surprising if the company saw some softness on its top line.

But if that does happen, it’s likely to be a short-term phenomenon and no reason to avoid a long position in NFLX stock. One thing that may hold some investors back is the stock price. Trading at close to $1,000 a share, Netflix is drawing attention as a candidate for a stock split. That wouldn’t change the stock's intrinsic value, but it would make it more accessible for retail investors.