Yahoo Finance

Key Points

• Netflix’s first-quarter earnings easily beat analyst expectations but didn’t immediately move the stock.

• The chart pointed upward before the report, driven by a leaked strategy discussion showing ambitious long-term management goals.

• New growth drivers include ad-supported plans, live sports, and a strong lineup of shows.

Shares of Netflix (NASDAQ: NFLX) rose 21.4% in April, according to data from S&P Global Market Intelligence. You might expect the company's impressive earnings report to provide fuel for these fires. It sure didn't hurt the stock that the first-quarter numbers were strong, but the report barely moved Netflix's stock price at all. Instead, investors pushed shares higher on the basis of rumors, leaks, and lofty expectations.

Netflix's stock went wild before earnings (and then kept going)

Heading into the earnings report, The Wall Street Journal got hold of some internal Netflix memos that supposedly outlined the company's long-term goals. According to the notes, management aims to double its annual revenue and triple its operating income over the next five years.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

As a result, the stock could also double and qualify Netflix for the ultra-exclusive club of trillion-dollar market caps. This scoop boosted its stock price by 4.8% in a single day.

Then it was time for the first-quarter earnings report. Netflix collected revenue of $10.5 billion, slightly above management's guidance and analysts' consensus estimates.

On the bottom line, the earnings number of $6.61 per diluted share left guidance and estimates far behind, representing a 25% year-over-year jump. But management didn't change its full-year guidance, and the stock didn't really move on the news.

However, Netflix had set the tone for a bullish investor mood. Several analysts issued optimistic reports on the stock, and the price gains started to appear. One week later, its price had gained another 12.7% while the S&P 500 (SNPINDEX: ^GSPC) market index only rose by 3.8%.

Can Netflix keep the bullish momentum going?

The media-streaming pioneer is firing on all cylinders nowadays. It's a sharp shift from the meandering subscriber growth and plunging stock chart of 2022. Whether Netflix can join the trillion-dollar market-cap club by 2030 or not, the company looks ready for another dramatically different chapter.

This time, the potential growth drivers include a low-priced subscription plan in a shaky economy, lots of live sports and other livestreaming events, and a fantastic slate of popular multi-season shows. Netflix's video games aren't making a difference yet, and only time will tell whether the company will benefit from using artificial intelligence tools on the content production side, but that's OK. The gaming idea shouldn't be rushed, and there are plenty of bullish signs in the air anyway.