Fantastic News for Netflix Stock Investors!

Netflix (NASDAQ: NFLX) is going through a rough patch. The company's shares are down 45% over the past 12 months, as investors increasingly worry about slowing revenue growth and stiff competition. Netflix's recent second-quarter update, released on July 16, seems to have confirmed these fears. Even though its revenue and earnings for the period met Wall Street's estimates, the company's third-quarter guidance didn't, leading to a sharp post-earnings drop.

However, there are still good reasons to be optimistic about Netflix's future. Let's consider one remark management made during the company's latest earnings call that should have investors excited.

A large remaining opportunity

Netflix set out to revolutionize entertainment, and it has succeeded. The company has pioneered the streaming category, which has gained significant traction over the past decade. However, there is still plenty of room for the company to grow, and management was quick to point that out. As the company's CFO, Spencer Adam Neumann, said:

We're under 45% penetrated into addressable households around the world. It's roughly 800 million addressable households. We're capturing, we think, just 7% of addressable revenue market.

This data suggests a massive opportunity ahead as streaming continues to displace traditional cable due to its much more convenient format, and that's excellent news for the company's future. But can Netflix overcome recent obstacles and beat the competition to be one of the biggest winners in this untapped market? My view is that the answer is a resounding "yes." Here's why.

Netflix has a strategy in place to attract more viewers to the platform. The company noted that over the past five years, six of the top 10 days for new member sign-ups came from live events. In other words, by doubling down on live programming, Netflix could significantly boost its ecosystem of paid subscribers. The company is especially going after live sports and plans to bid on events that could have an even bigger impact than the ones it has already landed.

Netflix owns the rights to the 2027 FIFA Women's World Cup, for instance, and is now planning to bid for the Men's World Cup, which is more popular. But the sports niche is just part of the company's live programming strategy. It has launched successful live events and shows in other categories in recent years. Expect more in the future. Of course, live programming is just one of the many niches the company could tap into to boost engagement and subscriber count. The company has ramped up long-form video podcasts, gaming, and other initiatives.

And that's before we account for the company's wide moat from its brand name, which gives it a significant competitive advantage over most competitors in the streaming market and grants it some pricing power. All of that tells us that Netflix can recover and deliver strong returns to patient investors. The stock is still a buy, especially on the dip.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.