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 thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to 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 fourth-quarter 2020, the company had 203.66 million paid subscribers globally.
Netflix has been spending aggressively on building its original show portfolio. This is helping it sustain its leading position despite the launch of new services like Disney+ and Apple TV+ as well as the existing services like Amazon prime video.
Netflix streams movies, television shows and documentariesacross a wide variety of genres and languages. Subscribers,both domestic and international, 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 $25 billion in 2020.
Beginning fourth-quarter 2019, Netflix started disclosing 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 45.8% of total revenues in 2020. At the end of fourth-quarter 2020, the company had 73.94 million paid subscribers in the region.
EMEA accounted for 31.1% of total revenues in 2020. At the end of fourth-quarter 2020, the company had 66.70 million paid subscribers in the region.
LATAM contributed 12.6% of total revenues in 2020. The company had 37.54 million paid subscribers in the region at the end of fourth-quarter 2020.
APAC accounted for 9.5% of total revenues in 2020. The company had 25.49 million paid subscribers in the region at the end of fourth-quarter 2020.
In the Domestic DVD segment, Netflix delivers DVDs through the U.S. postal service from distribution centers located in major U.S. cities. Revenues from the DVD segment were $0.2 billion in 2020.
Bottom Line
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Netflix a decade ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in July 2011 would be worth $14,075.47, or a 1,307.55% gain, as of July 1, 2021, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
The S&P 500 rose 225.41% and the price of gold increased 13.44% over the same time frame in comparison.
Analysts are forecasting more upside for NFLX too.
Netflix is dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content. The company plans to release at least one new original film every week in 2021. User-friendly features like Downloads For You are key positives. The launch of low-priced mobile plans is likely to expand Netflix’s subscriber base in Asia Pacific. However, Weak content slate and delayed production due to the coronavirus led disruptions is expected to hurt Netflix’s prospects in the second quarter of 2021. Rising competition from Apple, Amazon, HBO Max, Disney+ and Peacock is a major headwind. Netflix’s leveraged balance sheet and higher streaming obligation is also a concern. Shares have underperformed the industry year to date.
The stock is up 5.80% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 1 higher, for fiscal 2021. The consensus estimate has moved up as well.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Netflix, Inc. (NFLX): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
