Zacks Equity Research
·4 min read
For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
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 the fourth quarter of 2023, the company had 260.28 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 44.5% of fourth-quarter 2023 revenues. At the end of the quarter, the company had 80.13 million paid subscribers in the region.
EMEA accounted for 31.5% of fourth-quarter 2023 revenues. Netflix had 88.81 million paid subscribers in the region at the end of the quarter.
LATAM contributed 13.1% of fourth-quarter 2023 revenues and had 46 million paid subscribers in the region at the end of the quarter.
APAC accounted for 10.9% of fourth-quarter 2023 revenues. The company had 45.34 million paid subscribers in the region at the end of the quarter.
Bottom Line
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Netflix, if you bought shares a decade ago, you're likely feeling really good about your investment today.
According to our calculations, a $1000 investment made in January 2014 would be worth $10,189.65, or a 918.97% gain, as of January 26, 2024. Investors should keep in mind that this return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 173.37% and gold's return of 57.01% over the same time frame.
Going forward, analysts are expecting more upside for NFLX.
Netflix added 13.12 million paid subscribers globally in fourth-quarter 2023, with a rise of 1% in average revenue per subscription. The company attributed the robust top-line growth to its paid subscription-sharing offering (part of its password-sharing crackdown), recent price changes and the strength of its business in general. Netflix is expected to continue dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized and foreign-language content. Shares have outperformed the industry in the past six months. However, stiff competition in the streaming space from the likes of Apple, Amazon Prime Video, Disney+, Peaco*ck and Paramount+ is a headwind. NFLX’s leveraged balance sheet and a higher streaming obligation are concerns.
Over the past four weeks, shares have rallied 14.57%, and there have been 11 higher earnings estimate revisions in the past two months for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.
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Netflix, Inc. (NFLX) : Free Stock Analysis Report
