Is Netflix a Good Investment?

PHOTO CREDIT: Netflix

OVERVIEW

Netflix Incorporation is a technology company based in the United States. The company operates a streaming service where subscribers can watch an unlimited amount of content on the Netflix platform. The company’s streaming service is offered through many different plans and is available in every country in the world except Syria, China, and North Korea. The company boasts over 190 million worldwide subscribers. The company was founded in 1997.

Why You Should?

  1. Netflix is the largest streaming service company in the world. The company’s service is available in every country except China, North Korea, and Syria, which means that there is tons of room for growth across all of its markets. The company currently boasts over 190 million subscribers across all of these markets. This large scale will help the company’s future growth and will also benefit investors in the company.
  2. Even though Netflix has seen domestic subscriber growth slow, the company still sees a great opportunity for future growth in the future. Some of these key markets include Europe and India. This international growth will further cement Netflix as one of the largest streaming service platforms in the world. This growth will also benefit investors in the company.
  3. The COVID-19 pandemic has boosted the subscriber growth for Netflix. This is because people around the world are at home due to closures and government regulations in order to prevent the spread of the COVID-19 virus. As people stay at home, they are looking for ways to entertain themselves and their friends and family. Purchasing a Netflix subscription is a great way to do this. This has benefited the company.
  4. Netflix has produced some great films and shows under the Netflix Originals segment. Series like Queen’s Gambit, The Crown, Bodyguard, Extraction, and many others have made a Netflix subscription more valuable to users. This content creation will continue to drive subscriber growth and will help Netflix’s future growth. This will also benefit investors in the company.
  5. Netflix has reported rising revenues and profits over the past couple of years due to the reasons mentioned above. This has helped the company further grow its portfolio of content offerings around the world. This has also helped the company grow in all of its operating markets. These metrics have also benefited investors in the company. In the financial year of 2019, the company reported revenues of around 20.16 billion and profits of around 1.87 billion. Both of these metrics are higher than what the company reported in the financial year of 2018 when they had revenues of around 15.79 billion and profits of around 1.21 billion.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. Netflix has struggled to meet analyst expectations during the financial quarters which the company reported during this pandemic. Netflix reported slowing domestic subscriber growth numbers despite the pandemic. This has hurt the stock price and has also hurt investors in the company.
  2. Netflix faces tough competition from other streaming services like Spotify, Disney, Amazon Prime Video, Apple TV, and many others. In fact, Disney expects to surpass Netflix to take the spot as the largest streaming service by 2024. This competition might hurt Netflix in the future and might hurt investors in the company.

MY OPINION

I think that Netflix is a decent long-term investment due to its massive scale, good future growth, impacts from the COVID-19 pandemic, Netflix Originals, and rising revenues and profits. However, tough competition and missed analyst expectations have hurt the company and have also hurt investors in the company.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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