Brian E. Murphy
1 year ago
Online television network, Netflix (NFLX), is leading the streaming video market during COVID-19. As a result, stock investors are bidding up the company’s shares. But the real question you should ask yourself is: Is this the right time to invest in Netflix stocks?
Since March, the majority of the modern world has stayed safe at home, streaming more shows than ever before. So it doesn’t come as a surprise that the Netflix stock has risen a whopping 60% year-to-date.
But Netflix is not alone in the online streaming space.
Apart from the traditional TV networks, streaming services are popping up faster than microwave popcorn: Disney+, HBO Max, Comcast, Amazon Prime Video, Apple TV+, and Hulu.
These are just some of Netflix’s rivals. And the market just gets aggressive as more people succumb to binge culture. But professional investors believe that the company’s golden age is coming to an end. With a massive addition of 25.8 million subscribers (net) since the beginning of 2020, Netflix can only go one way – down.
But before we get into the future of the Netflix stock, let’s first take a trip back to the beginning:
Netflix: The Beginning
Netflix was founded by Marc Randolph and Reed Hastings in August 1997. I started as an online movie-rental service. You ordered DVDs online and got them via direct mail. When you were done watching, you simply mailed the DVDs back inside a complimentary envelope.
Super inventive for the late nineties.
In 2000, Netflix launched a personalized movie recommendation website, which used viewers’ ratings. The new service was so popular that the company went to IPO 2 years later at $15 per share.
Fast forward to 2007, when Netflix introduced “watch now,” a streaming service that enables subscribers to watch television shows and movies on their personal computers. It took 7 more years, and the world was conquered. Today, Netflix is streaming across 190 countries, entertaining over 192 million subscribers.
The Streaming War: Netflix Against the Rest
Being a trail-blazer does not make you immune to the competition.
Traditional media companies caught on the streaming frenzy. They are working hard to grab their share of this booming market—some more successfully than others.
Walt Disney launched Disney+ in November 2019, AT&T followed with HBO Max. And once the entertainment industry finally realized that online streaming is the way to broadcast, Comcast’s Peacock, Amazon Prime Video, Apple TV+, and Hulu, started investing heavily in original content to stream online.
The financial market’s interest peaked, and the streaming industry became a coveted investment. Stocks went up, money was easily made, and the world discovered a new thriving industry. And as movie theaters, music concerts, and sports events are shut down due to the pandemic – online streaming is on the rise.
Is the NFLX Stock a Surefire Buy in 2021?
Over these past two years, Netflix is focused on growing its global subscriber base.
They invest heavily in multi-lingual original content production across the globe, catering for approximately 62% non-English viewers out of their 192+ million subscribers.
This is the main reason why the Netflix stock is a hot commodity right now, trading wildly ever since its June-quarter earnings report was issued.
But is the NFLX stock a long-term winner? The COVID-19 crisis will fade away (hopefully), and people will go back to more healthy and TV-free lifestyles. Will the stock plummet as a result of this?
Netflix is focused on growing its global subscriber base
The inarguable fact is that Netflix is still the best entertainment platform around, and relatively cheaper than its rivals. Its huge database that caters to 200 million global households, the unlimited production budgets, and critically acclaimed original TV shows & movies make Netflix a super-growth company and a safe investment.
Plus, Netflix’s revenue is estimated at $90 billion, a number that is well on its way to double itself due to the company’s global reach goals for the upcoming six years.
All these factors make NFLX a favorable long-term investment and a solid BUY on future dips.
Market analysts predict an earnings-per-share expansion of up to $50 by 2030. This implies the stock price will pass the $1,000 mark by 2029.
However, there are those who discovered that the NFLX stock is on its way to an overhaul in the near-term. There’s no reason to panic because the graphs show robust progress in the long run. So if there will be an overhaul, it will be short term.
It may seem like the wrong time to buy Netflix stocks, considering the share price has increased by almost 50% since the beginning of the year. So pro traders are buying when the stock goes below $480 and hold it all the way to the longed-for $1,000 cap.
Netflix is Holding on to Its Crown
Netflix’s sales jumped 25% during the second quarter of 2020, to $6.15 billion. The company’s executive professes that the second half of 2020 may be more challenging than the first. Still, financial traders should know that a revenue increase of 20% is expected in the third quarter.
Netflix’s stock isn’t cheap, but you don’t have to spend hundreds of dollars.
The best way to invest a small fraction and earn big is still by trading CFDs (Contracts for Difference), on a user-friendly online platform.
So if you have a 2-5 year investing timeline, and you wish to benefit from the sizzling-hot streaming war that’s going on right now, this is where your buck should go.
Brian E. Murphy