Netflix stock is up 351 TP3T so far this year. can the streaming service continue?

Netflix (NASDAQ: NFLX)The company is expected to announce its results on April 18, after the close of business. Prior to the release, investors had been weighing the possibility of membership growth in the fourth quarter of 2023, after the company began cracking down on shared memberships and heavily advertising to support them. That move resulted in some impressive numbers in 4Q23. The question now is, can this growth continue?

Simply put, Netflix's gambit seems to have worked.

Member Growth, Profitability and Mentoring

Streaming media is a highly competitive business, and one of Netflix's main concerns is that in the Disney (NYSE: DIS)respond in singingParamount Global (NASDAQ: PARA)Can Netflix continue to drive membership growth as competitors continue to compete for market share in the streaming media market? For Netflix investors, the increased competition hasn't hurt their investments over the past 12 months. With shares up about 82%, ad-based memberships and the crackdown on password sharing seem to be working.

Global paid memberships increased 12.81 TP3T year-over-year to 260.28 million in the fourth quarter of 2023, compared to 41 TP3T in the same period a year ago, with operating margins of 16.91 TP3T, compared to 71 TP3T in the fourth quarter of 2022, and diluted earnings per share of $2.11, compared to $0.12 diluted earnings per share in the fourth quarter of 2022. Diluted earnings per share

While these numbers are great, what really encourages me are the continued positive forecasts. First quarter revenues are expected to be $9.24 billion, up 13.21 TP3T year-over-year, and operating margins are expected to be 26.21 TP3T versus 211 TP3T in 2023. Net income is expected to be $1.98 billion, up 511 TP3T from 1Q23, and EPS is expected to be $4.49 on a diluted basis. This would represent a year-over-year increase of nearly 56%.

Bull Market Cases

Looking ahead to the full year, the views in the fourth quarter shareholder letter provide us with clues as to what to expect:

"We will enter 2024 with good momentum. We expect to deliver healthy double-digit revenue growth on an F/X neutral basis for the full year 2024, driven by continued membership growth and improvements in F/X neutral ARMs as we adjust our pricing.

Gwen further reiterated their intention to continue to grow the advertising business, which I ultimately believe is necessary if all streamers want to profit from more traditional forms of content.

As mentioned earlier, the company's stock price has been strong over the past 12 months, rising as much as 82%. To continue this trend, user numbers are arguably the most important metric. Continued growth in membership will support other metrics such as revenue and earnings. In my opinion, the other most important factor is the company's ability to continue to do well in the advertising business. Advertising-related programs provide Netflix with something that peers like Hulu and Parmount+ often leverage.

Netflix seems to be focusing more on creating the best environment to increase member mass growth and engagement as they continue to release new content.

Currently, analysts are estimating 2024 earnings of $17.21 per share. On a P/E basis, Netflix is valued at just over 35 times forward full-year earnings. That's well below the 5-year average of 62 times earnings listed on Ycharts. If the company can report solid growth in membership, coupled with earnings that meet expectations, then the stock may have room to rise.

Should you invest $1,000 in Netflix right now?

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David Butler does not own any of the stocks mentioned above.The Motley Fool holds recommendations for Netflix and Disney.The Motley Fool has a disclosure policy.

Netflix Stock Is Up 351 TP3T So Far This Year: Can the Streaming Service Survive? This post was originally published by The Motley Fool.