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[Juanjo Pollreisz]

Netflix (NASDAQ: NFLX) has minted a lot of millionaires since its public debut in 2002. A $10,000 investment in its initial public offering (IPO) would be worth a whopping $5.4 million today. But it wasn't a smooth ride. Netflix's stock endured some steep declines over the past two decades as it repeatedly transformed its business model, yet it has consistently proved the bears wrong.

Some investors might argue that Netflix is running of room to grow. After all, it already owns the world's top premium streaming video platform with 269.6 million paid subscribers and has a market capitalization of $260 billion. But could this streaming video giant still generate more millionaire-making gains from a fresh $10,000 investment today?

Back in April 2022, Netflix's stock sank to its lowest levels in more than four years. That decline was triggered by its first sequential loss of subscribers in over a decade in the first quarter of 2022.

It attributed some of that decline to the Russo-Ukrainian war and users sharing their passwords, but management also admitted that the company faced stiff competition and said it would roll out a cheaper ad-supported tier to gain new users. Those strategies suggested Netflix was running out of room to grow, and that it still needed to ramp up its spending on fresh content to lock in more viewers. It suffered another sequential loss of subscribers in the second quarter of 2022.

However, Netflix gained subscribers sequentially in the third quarter of 2022, and its year-over-year growth in subscribers accelerated over the past year. It also started generating double-digit revenue growth again over the past two quarters.

Netflix attributed its accelerating growth to the expansion of its new paid-sharing plans, price hikes for its existing subscribers, currency exchange tailwinds, and robust viewership numbers for hit shows like Griselda, 3 Body Problem, and Avatar: The Last Airbender. Its number of ad-supported memberships also grew nearly 70% sequentially in the third and fourth quarters of 2023, then rose another 65% sequentially in the first quarter of 2024.

For 2024, Netflix expects its revenue to rise between 13% and 15% and for its operating margin to expand from 21% to 25%. Those expanding margins reinforce its reputation as the only major streaming platform that can generate consistent profits. Walt Disney, which served nearly 150 million paid Disney+ subscribers in its last quarter, believes its direct-to-consumer (DTC) streaming unit can finally turn profitable by the fourth quarter of fiscal 2024 (which ends this September).

Netflix is still expanding, but it recently surprised investors by saying it would stop disclosing its paid subscriber and average revenue per member (ARM) metrics in 2025. It insists those changes reflect the expansion of its pricing tiers and the introduction of new revenue streams like advertising and paid sharing plans. However, the elimination of those key metrics could make it much harder to gauge Netflix's growth while masking the lumpier expansion of its global audience.

For now, analysts expect Netflix's revenue to expand at a compound annual growth rate (CAGR) of 12% as its earnings per share (EPS) increases at a CAGR of 28%. But at $580, Netflix's stock doesn't look particularly cheap at 34 times this year's earnings. That's because it's still being valued as a higher-growth tech stock, rather than a slower-growth media stock.

Let's assume Netflix hits those targets and grows its EPS at a respectable CAGR of 20% through 2034. If that happens and Netflix still trades at about 30 times earnings, its stock might be trading at around $3,300 per share in 10 years.

That would represent a near-sixfold gain from its current price -- but it would fall woefully short of turning a $10,000 investment into $1 million. Netflix is still a solid play on the secular growth of the streaming media market, but investors shouldn't expect it to replicate its millionaire-making gains from the past two decades.

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If you've got your eye on Netflix, you've come to the right place. Here are three-must know reasons to buy this unstoppable growth stock. Investors should also understand that there's one simple reason to sell shares.

As of March 31, Netflix had 270 million subscribers, with a presence in more than 190 countries. And it generated $35 billion in sales in the past 12 months. To be clear, no pure-play streaming service has this kind of reach.

By being the first to market, launching its streaming operations in the U.S. in 2007, Netflix was able to rapidly grow its membership base when competition was limited, simply because it had a superior user experience. Over the past few years, we've seen numerous businesses enter the so-called streaming wars. However, it looks like Netflix has already won the battle.

Netflix has so many customers and produces so much revenue, a nod to its scale, that it's able to spend massive amounts on content each year ($17 billion target in 2024) but still come out profitable. The business reported a stellar 21% operating margin last year, a figure that has steadily expanded in recent years.

Even more impressive, this company is throwing off billions in free cash flow. This is money left over after investing in content acquisition. Management is so confident in Netflix's financial position that the business now has a share buyback program in place.

Netflix's financial prowess puts it in a league of its own in the streaming industry. Walt Disney, perhaps its biggest rival, finally reported positive operating income (counting just Disney+ and Hulu). That goes to show you just how far ahead Netflix is, even though competition is certainly fierce.

Despite being able to increase revenue and customers 71% and 61%, respectively, between the first quarter of 2019 and the first quarter of 2024, there is still sizable growth potential for this business. Of course, Netflix will focus on trying to add to its subscriber base, particularly in less developed international markets. Co-CEO Greg Peters estimates the company's total addressable market to be 500 million smart-TV households.

Clearly, the stock isn't as cheap as it was around the early summer of 2022, when Netflix was losing subscribers and there were fears that its growth was done. But the situation was characterized by heightened uncertainty at the time, something that isn't the case today.

Based on Netflix's trajectory, though, net income is set to soar in the years ahead. And that makes the current valuation seem more palatable. Consequently, I believe investors should still consider buying the stock.

The reaction on Wall Street marks the latest indication of a profound shift in investor priorities away from subscriber growth and toward the bottom line, which holds implications for striking writers and actors as well as the shows and movies that end up on screen, experts told ABC News.

A password-sharing crackdown helped the streaming platform add 5.9 million subscribers over the three months ending June, which marked a staggering improvement from the same period a year ago when the company lost nearly 1 million subscribers, Netflix said.

In all, Netflix said it boasts about 232 million subscribers, far outpacing its nearest rival Disney+, which reported just shy of 158 million subscribers in May. (The Walt Disney Company is the parent company of ABC News).

Meanwhile, Netflix's free cash flow -- a measure of how much money is available to a company after it pays for operating expenses -- grew by $1.5 billion to a total of about $5 billion, the company said.

Despite the recent losses, Netflix stock has climbed roughly 44% this year -- a sign that the investor reaction this week suggests a judgment about an overvalued stock rather than an unhealthy company, Luis Cabral, a professor of economics and international business at New York University who focuses on the entertainment sector, told ABC News.

Still, the stock falloff is the latest sign of an industry-wide shift away from the breakneck subscriber growth that marked an early phase in the sector as companies jockeyed to accrue a large customer base that could shoulder out competitors, he said. Now, he added, companies like Netflix need to show that they're actually making money and delivering profits.

That means the companies are less likely to bankroll expensive shows or movies, she added. Some firms, including Netflix, have even imposed layoffs going back to last year as a means of cutting costs.

Viewers should expect a smaller selection of shows even after the calendar returns to normal following the strikes, she added. \"There was this rush to drive content over the last three to five years,\" she said. \"Everybody is going to pull back.\"

Earnings season is always an important time, says Brad McMillan, chief investment officer for registered investment advisor Commonwealth Financial Network. But this one, in particular, will be especially important.

"The resilience of corporate earnings has far exceeded even the most bullish of forecasts coming out of this crisis," says Michael Reinking, senior market strategist for the New York Stock Exchange. In recent quarters, companies' use of pricing power and strong demand by consumers helped firms beat estimates, and Reinking sees a similar setup heading into the Q4 earnings season.

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