Netflix (NASDAQ: NFLX) A 10-for-1 stock split was completed in November. The stock price is currently 43% below its all-time high. Immediate service (NYSE: NOW) A 1-for-5 stock split was completed in December. The stock price is currently 56% below its all-time high. Most Wall Street analysts believe the stocks are undervalued, and some expect the stock to rise sharply.
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Baird’s Vikram Kesavabhotla values Netflix at $150 per share, which would imply 95% upside from its current share price of $77. Among the 49 analysts covering the company, the median price target of $111 per share implies room for 44% upside.
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Keith Weiss is at Morgan Stanley ServiceNow is valued at $210 per share, which represents a 103% upside from the current share price of $103. Among the 47 analysts covering the company, the median price target of $180 per share implies an upside of 75%.
Investors prefer forward stock splits because they follow significant sustained stock price appreciation, which is typically a sign of quality companies. Here are the important details about Netflix and ServiceNow.
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By any measure of popularity, Netflix is the leading streaming service: It has more subscribers, more monthly active users, and accounts for a greater share of TV viewing time (excluding letterof YouTube) than any competitor. The streaming video market is expected to grow at an annual rate of 22% through 2030, according to Grand View Research, putting the company in a good position.
Netflix stands out with its original content. With more users and watch time than its competitors, the company has more data to feed machine learning models that inform content development decisions. As a result, Netflix originals often top the charts. In fact, the company will produce seven of the 10 most popular original streaming series of 2025.
Netflix has made an all-cash acquisition Warner Bros. DiscoveryIncluding debt, the streaming and studio business is worth $83 billion. The market has punished the stock since the news was announced, as Netflix will take on significant debt to fund the deal, which will reduce the cash flow available to fund original content creation.
However, Netflix will also acquire franchises such as DC Universe, game of Thronesand Harry Potter. Co-CEO Greg Peters said the company can leverage the intellectual property to develop original content that could drive decades of growth. While there are undoubtedly risks to this deal, I think those risks have been discounted.
Wall Street expects Netflix’s earnings to grow 22% annually over the next three years, in line with Grand View Research’s expectations for the broader streaming video industry. This looks reasonable and makes the current valuation of 30 times earnings look quite attractive. I doubt Netflix will return 95% next year, but the current price represents a solid buying opportunity for patient investors.
ServiceNow acts as an enterprise control tower. Its platform integrates and automates workflows across different departments, including information technology (IT), finance, human resources, sales and customer service. Consulting services Gartner Corporation The company was recently named a leader in business orchestration and automation technology.
ServiceNow is particularly dominant in the IT software space, with applications that help businesses optimize infrastructure costs and performance. The company has added generative AI capabilities to its software that can summarize content, express insights and build workflows. Gartner recently named the company a leader in the application of artificial intelligence to IT service management.
ServiceNow reported solid fourth-quarter financial results. Revenue increased 20% to $3.5 billion, and non-GAAP (adjusted) net income increased 26% to $0.92 per diluted share. Management expects sales growth to accelerate slightly in the first quarter. CEO Bill McDermott commented: “No AI company in the enterprise is better positioned to deliver sustainable, profitable revenue growth.”
ServiceNow shares are down 56% from their peak, in part due to investor concerns that artificial intelligence code generation tools will disrupt the software industry. But Wall Street expects the company’s adjusted earnings to rise 19% in 2026. That makes the current valuation of 29 times earnings look attractive. I doubt ServiceNow will return 103% next year, but investors should still consider buying a small position. More than 85% of Fortune 500 companies use ServiceNow, making widespread AI-driven replacement unlikely.
Before buying Netflix stock, consider the following factors:
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Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions and recommendations for Alphabet, Netflix, ServiceNow and Warner Bros. Discovery. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.
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