About Netflix (NFLX)
Netflix Inc (NASDAQ: NFLX) is an American streaming TV, movie, and content production company.
Founded in 1997 by entrepreneurs Reed Hastings and Marc Randolph, the company focused on disrupting the consumer ‘video store’ market controlled by global companies like Blockbuster Video. Launching a service that offered DVD rentals and sales by mail, they soon realized that rentals of DVDs and Blu-ray discs were the right core business to focus on.
In 2007, their business started to change into what it is today - a content streaming company. With the increasing speeds available on consumer broadband services, the company soon ventured into internet video streaming, on-demand.
And it worked. As of January 2020, Netflix Inc had more than 167 million monthly paid subscribers worldwide, with three tiers of monthly subscriptions to suit all households and budgets.
In 2013, they branched out into producing their own TV series’ and feature films, giving them greater control over content and the profits from it.
Netflix stock price
Netflix listed on the NASDAQ in May 2002 at $15.00 per share, staying at a relatively low price (below $36.00) until October 2012 when it began a long term climb. Aside from two significant price drops in 8 years (December 2018 and September 2019), the Netflix share price has risen steadily, hitting an all-time-high (ATH) of $575.37 in July 2020.
Revenue has grown from $11.7 billion in 2017 to $20.2 billion in 2019, and net income has nearly quadrupled over the same period, from $558 million to $1.9 billion.
What the bears are saying
- Netflix isn’t the only streaming company: When Netflix launched, it was up against big cable TV companies. Now, it’s up against huge content houses with deeper pockets - including Apple, Hulu, Disney, and Amazon Prime.
- Content production overheads can be high: Netflix has moved into producing 'Netflix Originals'. But this comes with substantial production costs and higher risks.
- Content has to stay desirable: As a Netflix subscription can be canceled at any time, the pressure is on to offer quality content and retain customers
What the bulls are saying
- Netflix is the leader in streaming media: No other subscription content provider has the breadth of content Netflix offers.
- The share price could go to $1000 or more: The pandemic has been good for Netflix, as millions of people have subscribed while staying at home. As Netflix’s fixed costs only increase by a small margin as the subscriber base grows, the potential for higher profits seems clear.
- Netflix knows what customers want: Netflix can track and analyze thousands of data points - from what programs are most-watched, to how often the service is used. This gives Netflix an incredible advantage in keeping subscribers happy.
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This article is for informational purposes only and takes no account of particular personal or market circumstances, and should not be relied upon as investment, tax, or legal advice. For investment, tax, or legal advice, and before taking any action you should consult your own advisors. Note that assets such as equities present unique risks for investors.
This content is correct as of October 2020
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