This is going to be a fun stock to watch over the next year.

Netflix (NFLX) announced their earnings last night… and they were spectacular.

To the naked eye, last night’s results were “mixed.” The company missed their earnings per share (EPS) number but beat their revenue expectations. But there’s more to the report that makes it spectacular.

Netflix reported 13.1 million new subscribers for the quarter. This is the number that people like me watch because it speaks to future revenue and earnings. This is the best number that the streaming giant has reported in some time, and they expect it to get better moving forward.

As a result, the company guided earnings expectations for 2024 higher, a move that Wall Street didn’t see coming as the streaming wars have forced most companies in the space to get lean and mean.

Netflix did that in 2022, though. Remember when the company took its hits and the stock dropped from $700 to $200? That was the result of a massive shift in the company’s subscription model as they adjusted to new streaming competition.

With the hard work behind them, Netflix is prepared to rise to the title of King of the Streams once again.

This is why the stock is heading to $700 again…

The streaming services are preparing for their own version of the mergers and acquisitions (M&A) game. The space became too crowded with providers and consumers are starting to “cut the cord.” My guess is that there will be three or four streamers left in the space after a few years. Netflix, YouTube TV, and ___________?

Netflix will be one of the “Big Three” broadcasters left, and the price will reflect that.

With about 40% of Wall Street analysts recommending the stock as a hold or sell, there is plenty of room for the stock to move higher on upgrades.

We’re already seeing that begin this morning, as 21 different research departments reiterated or upgraded the stock. There was one exception, Deutsche Bank, who downgraded Netflix… good luck with that.

Bottom Line

Shares are surging above the $500 price this morning and are likely to make a bee line to $600. Expect to see some profit-taking at those levels, but that will serve as the launching pad for the next rally to Netflix’s all-time high price of $700.

Do you think they’ll bring the Lion King back?

— Chris Johnson

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Source: Money Morning