Over the past decade, few stocks have delivered as much return on investment as Netflix. The streaming titan has churned out positive returns as almost reliably as it has released new seasons for "Chef's Table" and "Queer Eye," growing its user base from less than 50 million to 208 million.
Despite a disappointing first-quarter earnings report in which Netflix raked in a $1.7 billion profit but fell drastically short of expectations for subscriber growth, many investors see Netflix regaining its footing over the long term.
In its letter to shareholders, Netflix blamed coronavirus-related production delays for its "lighter content slate in the first half of this year," but said it expects to continue producing content as it invests $17 billion into its movies and shows this year.
The stock slid 7% at one point after Tuesday's earnings report.
If you invested in Netflix back in 2011, even a down quarter isn't enough to make a dent in the stock's overall upward trajectory over the years. The stock has grown nearly fifteenfold over the last 10 years.
A $1,000 investment in Netflix on April 20, 2011, would be worth $15,252 as of Tuesday, a gain of 1,425%.
That's significantly more than the S&P 500, which grew 209% over the same period. It's nearly double Google parent Alphabet's 767% growth rate since 2011 and even outpaces Apple's 1,134% growth over the past decade, during which a $1,000 investment would have turned into $12,339.
In 2011, Netflix had a market cap of $13.4 billion. But today, its $243.4 billion market cap is bigger than that of Twitter, Snap and Spotify combined. Its growth has been fueled by the cord-cutting revolution, as well as by massive investments into its content library.
Netflix, which since 2011 has relied on external financing to fund the billions of dollars it has spent building out its library with big-budget projects and deals, has said it expects to be cash-flow positive after 2021.
"While traditional media companies had one toe in the water and a glass-half-empty view of streaming, Netflix grabbed the bull by the horns and ran with it," Wedbush Securities managing director Dan Ives tells CNBC Make It. "Now, everyone is trying to play catch-up in a game that has changed the media ecosystem forever."
Despite its success, Netflix is also entering perhaps its biggest period of uncertainty, with Disney+, HBO Max and the new Paramount Plus network jockeying for subscribers. Disney+, with its growing stable of high-budget TV shows based on Marvel properties, is the service's closest rival, adding nearly 95 million paying subscribers since its November 2019 launch.
Looking forward, Netflix has 35 nominations at Sunday's Academy Awards, including two films, "Mank" and "Trial of the Chicago 7," both nominated for Best Picture — a prize that has eluded the studio. It also has major projects coming down from A-list collaborators like Dwayne "The Rock" Johnson, Leonardo DiCaprio and Martin Scorsese.
And while past results are no indication of future performance, Netflix's first-mover advantage and entrenchment into culture over the past decade has put it in a strong position, according to Ives.
"Whether it's Microsoft with its home office tools, Google with search or Netflix with streaming, these products have become consumer habits as commonplace as eating breakfast and having coffee in the morning," he says.
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