As of 12:45 p.m. ET on Monday, Netflix’s stock was trading 1.8% higher despite a significant market sell-off that saw the S&P 500 fall by 2.7%. Earlier in the session, the streaming video company’s stock had risen by as much as 4.7%.
The rise in Netflix’s stock price followed a wave of positive analyst coverage after the company released its first-quarter report last week. The report revealed sales and earnings that exceeded expectations and projected $8 billion in free cash flow for the year. Investors are optimistic about Netflix’s prospects despite broader macroeconomic concerns.
Investment firms such as Wedbush, Morgan Stanley, and JPMorgan responded positively to Netflix’s results and forecast, raising their price targets on the stock. Analysts view it as a potential growth play that may perform well even in a recession. In the first quarter, Netflix reported 12.5% sales growth and a significant earnings beat. For the second quarter, management forecasts sales growth to accelerate to approximately 15% and a projected operating income margin of around 33%, which represents a 6 percentage point improvement from the previous year.
For the full year, Netflix’s midpoint revenue target of $44 billion indicates growth of about 13%, while the operating income margin is expected to reach 29%. With strong profits, Netflix plans to continue its share buybacks and substantial investments in content.
