The stock market had a terrible year in 2022 amid rapidly rising interest rates and fears of a recession. But since the start of 2023, investor sentiment has turned optimistic with the Nasdaq Composite index rising 50% as of this writing.

But there's one business whose shares have crushed that tech-heavy benchmark, soaring 96% over the same period. The company is Netflix (NFLX 2.51%) -- is it time to buy this streaming stock?

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Netflix recently reported financial results for the first three months of 2024. Revenue and diluted earnings per share totaled $9.4 billion and $5.28, respectively. The top line was up 15% year over year, while the bottom line skyrocketed 83%. These headline figures crushed Wall Street's estimates, and the report caps off an impressive run of strong financial performance from the streaming leader.

Looking ahead, management believes revenue will rise between 13% and 15% in 2024. And executives upped their guidance on the profitability front, expecting full-year operating margin to come in at a stellar 25%, up from the previous forecast of 24%.

Netflix added 9.3 million net new subscribers during Q1, bringing the total to 269.6 million. This performance was driven by the monster success of the cheaper ad-supported tier, which saw sign-ups soar 65% quarter over quarter. The business is also doing a good job at converting users that previously shared passwords into paid accounts.

You'd think the stock would be trending higher following these upbeat results, but that hasn't been the case. As of this writing, shares of Netflix are down over 5% since reporting earnings on April 18, and there's one likely reason for this dip.

Management said that starting next year, it will no longer report quarterly subscriber figures. "We'll also announce major subscriber milestones as we cross them," the recent shareholder letter states. Wall Street hates uncertainty, as well as anything that hints at a lack of full transparency. And there are fears this decision may be driven by Netflix's inability to add new subscribers at a solid clip going forward, particularly because of market saturation and stiff competition.

Bigger picture

The decision to cease reporting subscriber figures isn't ideal, but for what it's worth, management will provide other guidance with a focus on revenue and profitability, as well as subscriber engagement trends. This is what Netflix wants shareholders to prioritize as well.

When it comes to engagement, Netflix has a massive opportunity ahead of it. Despite leading the streaming industry since first launching the service in the U.S. in 2007, the company commands less than 10% of total TV viewing time in this country. It's the same story in every market Netflix is available in.

With a massive content budget, coupled with an established core competency in creating popular content, engagement can steadily rise over time. Higher viewership creates ample opportunity for Netflix's ad business to gain steam as well.

Consider the valuation

Netflix shares have been on an absolute tear recently, so they aren't cheap like they were in the summer of 2022. The stock trades at a forward price-to-earnings ratio (P/E) of 32 right now. This represents a 20% premium to the Nasdaq-100 index, which might be too expensive for some investors.

But for Netflix bulls, it's easy to appreciate the company's dominant industry position and best-in-class financials. Netflix can continue growing its profits at an impressive rate in the years ahead as the business further scales up. That's a good reason to buy the stock.