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27 years ago today, Reed Hastings and Marc Randolph founded a company based on one idea: to sell and rent DVDs online and then mail them to customers' homes. They called it Netflix. In 2002 Netflix went public for $15 a share; by 2010 it had pivoted to streaming. Netflix then began began creating original award-winning content with popular shows like House of Cards and, who could forget, Orange is the New Black Josh.

Today, it has nearly 280 million global subscribers, 265 Emmys, and 23 Oscars. And by the way, if you invested $1,000 in Netflix in 2002 and left it there, you'd have about $690,000 today. According to our next guest, Netflix still has more room to grow. Joining us now is Mark Mahaney, Evercore ISI Managing Director Head of Internet Research. Mark, it is always uh great to see you. On Netflix you you recently did, Mark, some some interesting detailed survey work, uh which clearly left you feeling confident about this name. Walk us through that survey work Mark, if you could. Just give us the highlights.

Yeah, and thanks, I did I didn't realize today was the the birthday of uh Netflix. That's uh that's a fun data point. Uh and it really is amazing to see, I mean you know they they did start the business with the idea that they would be streaming, but you couldn't have physically streamed anything 27 years ago or 28 years ago, whatever it was. Uh so that's you talk about visionary, I mean, they were thinking about an industry that didn't even exist when they started the company, good for them. Uh anyway, we do our we've done quarterly survey work in the U.S. for 11, 12 years now and uh we've done annual work in international markets. This time we looked at uh Mexico, but we look at a lot of different ones. We try We test for a couple of things, things like uh you know um penetration or selection. How many people are selecting Netflix as their go-to streaming source? And then what's the satisfaction level like at the company? What's the intent to churn? And we've tracked these metrics over the years, and not always, but they've generally gone up into the right, but not always. Uh and this most recent um survey, we we keep seeing uh Netflix as the leading streaming option for consumers in both the U.S. and in international markets, in this case uh uh uh Mexico. Uh there is rising price sensitivity. We've had some uh price actions taken across the industry recently so that that's there's that always leads to a little bit of extra churn. Uh you're also getting much more mature, uh not saturated, but mature in the market, so that's going to cause um that's going to cause uh uh you know churn to be more likely. You're well past your early adopters and you're kind of in your you know average or even late-stage adopters. But all in, then maybe the last point I'd I'd make is that the one that standout differentiator for Netflix continues to be the quality of its content when you really press people on a survey on you know where do you find the actual best content, the best shows? It's always and very consistently been uh been Netflix. So yeah, that keeps us constructive on a stock. It's not one of our top picks uh because of valuation, but we're constructive on it. We see a path to like 750, and that's you know not huge upside from here, maybe 10%, maybe.

Yeah. Well, Mark, I I love that you point that out in your note. You say that the 750 price target, it doesn't imply dramatic upside, but you still sound fairly bullish on it. At what point though for investors, do you think, okay, the biggest gains we were going to get are kind of already passed us here because Netflix can only grow so much. There's only so much market share that they can take up.

Well then then Madison, the question I have to ask Investors have to ask is can you identify kind of new growth initiatives that can kind of bend the curve again? And there's two that I think of with this company, maybe three. Um so first is live sports. So we're getting the NFL on NFLX on Christmas Day, and um you know that that's a that's a that's a pretty big moment. Now, they've had live events, live comedy, they've had some unusual sports events. I think you've got the Tyson fight, you know, coming up on Netflix, but that you know if um Netflix today is about 75 million households that are subscribing. My guess is if they were to really pick pick up a big live sports presence, you'd probably get you know 10, 20 more a million more households signing up for Netflix, so I think that's a new interesting new growth area. And then gaming is another one, but believe it or not, there's uh uh we see this in our surveys, rising usage of Netflix. There's a fair number of games on there, some of it comes out of their own original uh you know IP uh intellectual property. And then third is the the ads business is still a ways away from really moving the needle for for Netflix. It just It it takes some time. They have to build out the the user base, but I think those ad dollars are coming, they just haven't, like I I don't think I think they I give them a B on how they've done so far in ad revenue. So I I still see like two or three of these drivers, and I you know essentially I want to stay long the stock. Am I going to aggressive buyer here? No. Would I be at 600? Yes, and in this market you can always get these kind of clips. You did You had one earlier this year, so to me, I just kind of I view it as high quality, and if it gets dislocated down you know 10, 20%, that's when I usually step in and get in, make an aggressive buy, but it's a good asset you want to stay long in.

Mark, you think price increases could be on the way? I mean even if they do, Mark, I'm not going anywhere. To your point, content's too good. Baby Reindeer, Ripley, I'm totally hooked. But what kind of price hikes could I be looking at, Mark, in your opinion, and what would it mean for the business?

Well, this company generally has taken price up over the years. But sometimes that's been problematic for them. Um you know they they have to get the metrics right. So if they can really see internally rising satisfaction, rising engagement, that kind of gives them a little bit of the green light to raise prices, but you know you have to be careful how you do that. You better have a better value proposition. You're kind of have to You're going to have to justify that to the consumers. The open question I have is I think they'll take price whether they'll do it on the lowest price point in the industry, kind of that $6.99 ad supported service or whether they'll do it on their $15.49 standard plan. And these are U.S. prices, but I think they'll do it globally. I don't know. I don't know quite know what their strategy is. I I think the what what they what's really caused the sub growth to really reaccelerate the last two years, I mean dramatically reaccelerate the last two years has been the rollout of password sharing crackdowns and the ad supported plan. I mean Netflix got cheaper for everybody. $10 too much for you? How about $6.99? By the way, that's the cheapest price across the entire streaming industry for the simple best package out there. You get more content for your $6.99 than anyplace else. It's a steal of a deal. Whether Netflix wants to keep that as a steal or not, I don't know. I think they could take up that price or the 15.49. So I But I do I do think you will see more price increases.