The 46% shortfall easily stood out from the previous three misses, the largest of which was 27%. This miss is just as substantial as it sounds in its last 14 quarters, this was only Netflix's fourth disappointment. More fundamentally, recurring revenue businesses like NFLX are revered by shareholders because, at their best, they pay once to acquire a customer, then enjoy an eternal stream of increasing future cash flows for their troubles. That's up more than 50% from its introductory price of $7.99 in 2010, which stood stagnant until its first-ever increase of $1 per month in 2014.īroadly speaking, consumers are on board with that value proposition: Netflix, which now has more than 150 million paid subscribers worldwide, was still growing revenue by 26% midway through 2019 on the heels of 22% subscriber growth. Luckily for NFLX shareholders, Netflix is doing both, with standard subscription prices now at $12.99 a month for its standard plan, the most popular. Other than raising prices, that's the only way to grow the top line. It's no surprise that subscription-based business models rely on subscriber growth to increase revenue. Here are five pros and five cons to consider before buying Netflix stock. Instead, Netflix casually pioneered and successfully navigated the pivot to streaming TV, delivering your favorite content in a matter of milliseconds, not business days.ĭue to its first-mover advantage, Netflix quickly made mincemeat of Blockbuster, and today it dominates the streaming TV market.īut does its early lead spell continued success for NFLX stock, or has the epic run-up of its share price over the years been too aggressive? In hindsight, it's easy to see how the company could've quickly become another bygone relic of business models past, a dinosaur of Silicon Valley relegated to Wharton case studies. Netflix became a household name by mailing DVDs. Having shown an ability to transform consumer behavior in a long-term, sustainable way, it's no surprise that the Netflix stock price has grown exponentially since its initial public offering in 2002. (ticker: NFLX), the world's premier streaming video service. Few companies have had a greater impact on how people consume entertainment than Netflix, Inc.
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