How much a stock’s price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you’d invested in Netflix (NFLX) ten years ago? It may not have been easy to hold on to NFLX for all that time, but if you did, how much would your investment be worth today?
Netflix’s Business In-Depth
With that in mind, let’s take a look at Netflix’s main business drivers.
Netflix is considered a pioneer in the streaming space. The company evolved from a small DVD-rental provider to a dominant streaming service provider, courtesy of its wide-ranging content portfolio and a fortified international footprint. At the end of the second quarter of 2024, the company had 277.65 million paid subscribers globally.
Netflix has been spending aggressively on building its portfolio of original shows. This is helping the company sustain its leading position despite the launch of new services like Disney+ and Apple TV+, as well as existing services like Amazon Prime Video.
Netflix streams movies, television shows and documentaries across a wide variety of genres and languages. Domestic and international subscribers can watch them on a host of internet-connected devices, including television sets, computers, and mobile devices.
The Los Gatos, CA-based company reported revenues of $33.72 billion in 2023.
Beginning fourth-quarter 2019, Netflix started declaring revenues and membership data by regions — the Asia Pacific (APAC); Europe, Middle East & Africa (EMEA); Latin America (LATAM); and the United States and Canada (UCAN).
UCAN accounted for 44.9% of second-quarter 2024 revenues. At the end of the quarter, the company had 84.11 million paid subscribers in the region.
EMEA accounted for 31.5% of second-quarter 2024 revenues. Netflix had 93.96 million paid subscribers in the region at the end of the quarter.
LATAM contributed 12.6% of second-quarter 2024 revenues and had 49.25 million paid subscribers in the region at the end of the quarter.
APAC accounted for 11% of second-quarter 2024 revenues. The company had 50.23 million paid subscribers in the region at the end of the quarter.
Bottom Line
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Netflix ten years ago, you’re probably feeling pretty good about your investment today.
A $1000 investment made in October 2014 would be worth $14,766.85, or a 1,376.69% gain, as of October 22, 2024, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
Compare this to the S&P 500’s rally of 201.55% and gold’s return of 109.70% over the same time frame.
Analysts are anticipating more upside for NFLX.
Netflix’s third-quarter 2024 results benefited from its growing subscriber base, thanks to a robust localized and foreign-language content portfolio and healthy engagement levels with about two hours of viewing per member per day, indicating strong member retention. The planned launch of an in-house ad tech platform in 2025 signals Netflix’s commitment to maximizing this new revenue stream, with ad revenues expected to roughly double year-over-year in 2025. Netflix has raised its guidance for the full year 2024, projecting revenue growth at the high end of its previous 14-15% range. Shares have outperformed the industry year to date. However, stiff competition in the streaming space from the likes of Apple, Amazon Prime Video and Disney+ is a headwind. NFLX’s leveraged balance sheet and a higher streaming obligation are concerns.
Shares have gained 9.46% over the past four weeks and there have been 11 higher earnings estimate revisions for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.
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